From the retrocession program, (with any cocontribution being made from ARPC capital and then through the government guarantee); and finally Through the government guarantee, up to the $10 billion cap. The sum of these tiers represents the maximum claimable amount under the scheme. Should the total claimed losses exceed the capital of the ARPC, the value of retrocession cover purchased and the $10 billion government guarantee, a percentage’ would be applied and claims would ‘reduction be paid on a pro rata basis. Insurers that reinsure their terrorism risks with ARPC retain part of the cost from a DTI. The retention, similar to an excess or deductible, requires the insurer to pay the first part of any claim. Retentions for individual insurers are calculated as 4 per cent of fire and industrial special risk premiums collected by the insurer, with a minimum retention of $100,000 and a maximum retention of $10 million. The ARPC’s reinsurance agreement also provides for a maximum industry retention of $100 million. If the sum of the retentions of individual insurers in respect of all eligible terrorism losses caused by a single DTI exceeds the maximum industry retention of $100 million, then each insurer’s retention is reduced proportionately. Figure 1: 2015 ARPC scheme capacity
From the retrocession program, (with any cocontribution being made from ARPC capital and then through the government guarantee); and finally Through the government guarantee, up to the $10 billion cap. The sum of these tiers represents the maximum claimable amount under the scheme. Should the total claimed losses exceed the capital of the ARPC, the value of retrocession cover purchased and the $10 billion government guarantee, a ‘reduction percentage’ would be applied and claims would be paid on a pro rata basis. Insurers that reinsure their terrorism risks with ARPC retain part of the cost from a DTI. The retention, similar to an excess or deductible, requires the insurer to pay the first part of any claim. Retentions for individual insurers are calculated as 4 per cent of fire and industrial special risk premiums collected by the insurer, with a minimum retention of $100,000 and a maximum retention of $10 million. The ARPC’s reinsurance agreement also provides for a maximum industry retention of $100 million. If the sum of the retentions of individual insurers in respect of all eligible terrorism losses caused by a single DTI exceeds the maximum industry retention of $100 million, then each insurer’s retention is reduced proportionately. Figure 1: 2015 ARPC scheme capacity