SOA Exam FAM Sample Question 74
Study guide: Exam FAM
A primary insurance company has a 100,000 retention limit. The company purchases a catastrophe reinsurance treaty, which provides the following coverage
| Layer 1: | 85% of 100,000 excess of 100,000 |
| Layer 2: | 90% of 100,000 excess of 200,000 |
| Layer 3: | 95% of 300,000 excess of 300,000 |
The primary insurance company experiences a catastrophe loss of 450,000.
Calculate the total loss retained by the primary insurance company.
- A) 100,000
- B) 112,500
- C) 125,000
- D) 132,500
- E) 150,000
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