Aggregate Excess Loss Layer Calculator
Calculate the aggregate loss falling within a layer above an attachment point, capped by the layer limit.
Description
Calculate how much of an aggregate loss total falls above an attachment point and within a capped excess layer.
Aggregate Excess Loss Layer Cost helps you calculate how much of an aggregate loss total falls above an attachment point and within a capped excess layer.
Use this deterministic layer calculator to allocate a known aggregate loss amount to a simple attachment-and-limit structure. It is useful for explaining layer mechanics and checking individual scenario outputs.
When to use Aggregate Excess Loss Layer Cost
Use this deterministic layer calculator to allocate a known aggregate loss amount to a simple attachment-and-limit structure. It is useful for explaining layer mechanics and checking individual scenario outputs.1
How the calculation works
Subtract the attachment point from ground-up aggregate losses, floor the result at zero, and cap it at the layer limit. The result is zero below attachment and equals the full layer limit once losses reach the exhaustion point.
Layer cost = min(max(L − A, 0), U) 1Inputs and interpretation
L is the known aggregate loss amount, A is the attachment point, and U is the layer limit or width. All amounts must use the same currency and loss basis.
Assumptions and limitations
This is not an expected reinsurance price. It does not apply a per-occurrence retention, reinstatements, aggregate deductibles, hours clauses, exclusions, expenses, trend, development, or a probability distribution.
References
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The Effect of Trend on Excess of Loss Coverage — Casualty Actuarial Society