Industry Loss Warranties (ILWs)

Industry Loss Warranties – ILWs

This is a short summary explaining Industry Loss Warranties (ILWs). ILW is explained in detailed in Actuarial SP7 subject (formerly ST7). Definition of ILW Industry loss warranties (ILWs) are a type of reinsurance contract where the basis of cover is not indemnity, i.e. repayment of actual losses suffered. Protection is based on the total loss arising from an event to the entire insurance industry rather than individual insured company’s own losses.  Trigger Event for ILWs The original size of the industry loss is used as a trigger for eligibility to a recovery. …

Ultimate Net Loss, third party recovery, reinsurance recovery, salvage

Ultimate Net Loss

What is Ultimate Net Loss For Insurer, the loss is when a claim is received. However, that is not the only aspect to consider while calculation of loss reserves or …

Average Severity

Severity refers to the amount you have received Insurance claim for. Average Severity would be the loss associated with an average Insurance claim. Average Severity Calculation To calculate Average Severity, …