Reinsurance Reinstatement Premium Calculator
Enter an excess layer, its reinstatement terms, and up to three occurrence losses. The calculator sorts the events by policy-year day and shows recovery, remaining capacity, reinstatement premium, and net recovery.
Net recovery after reinstatement premium$2,200,000.00
- Total reinsurance recovery
- $2,500,000.00
- Cedent retained losses
- $4,000,000.00
- First reinstatement premium
- $100,000.00
- Second reinstatement premium
- $200,000.00
- Total premium including reinstatements
- $500,000.00
- Remaining aggregate capacity
- $500,000.00
- Limit available for the next occurrence
- $500,000.00
- All-in premium rate on line
- 50%
Event-by-event recovery schedule
| Event | Day | Ground-up loss | Loss entering layer | Recovery | Cumulative recovery | Capacity remaining |
|---|---|---|---|---|---|---|
| Event 1 | 120 | $3,000,000.00 | $1,000,000.00 | $1,000,000.00 | $1,000,000.00 | $2,000,000.00 |
| Event 2 | 220 | $2,000,000.00 | $1,000,000.00 | $1,000,000.00 | $2,000,000.00 | $1,000,000.00 |
| Event 3 | 300 | $1,500,000.00 | $500,000.00 | $500,000.00 | $2,500,000.00 | $500,000.00 |
Events with zero ground-up loss are omitted from the schedule.
Each event is capped at one occurrence limit before aggregate capacity is applied.
How to use this calculator
- Enter the layer attachment, per-occurrence limit, and initial reinsurance premium.
- Choose whether the treaty has no reinstatements, one reinstatement, or two reinstatements.
- Enter the first and second reinstatement rates as percentages of the initial premium.
- Select amount-only or amount-and-time proration, then enter each event loss and policy-year day.
- Review the schedule to see how each event consumes the layer and aggregate capacity.
How the reinstatement premium is calculated
This calculator models a per-occurrence excess-of-loss layer with zero, one, or two reinstatements. It treats each entered loss as a separate covered occurrence, sorts nonzero events by policy-year day, caps each event at one occurrence limit, and then applies the total aggregate capacity created by the reinstatements.
Let A be the attachment, L the occurrence limit, K the number of reinstatements, P the initial premium, X_i the ground-up loss for event i, and d_i its policy-year day. The loss entering the layer is:
G_i = min(max(X_i - A, 0), L)
Total treaty capacity is T = (K + 1) x L. If cumulative recovery before the event is C_(i-1), event recovery is:
R_i = min(G_i, max(T - C_(i-1), 0))
The reinstatement charge is based on the share of the relevant layer tranche consumed. The first reinstatement premium is charged on consumption of the original layer. The second is charged on consumption of the first reinstated layer. For reinstatement k, with rate c_k, the premium is:
RP_k = P x c_k x sum((D_(i,k-1) / L) x t_i)
D is the amount of event recovery that falls inside the charged tranche. The time factor t_i is 1 for amount-only proration and (365 - d_i) / 365 for amount-and-time proration.
What moves the result most
The attachment decides whether a loss reaches the layer at all. The occurrence limit caps each event, even when reinstatements remain. The number of reinstatements sets the aggregate recovery ceiling: one original limit with no reinstatement, two limits with one reinstatement, and three limits with two reinstatements. The reinstatement rates and time basis decide how much of the recovery is given back as additional premium.
What the calculator leaves out
The model does not interpret contract wording. It excludes occurrence definitions, hours clauses, event aggregation, inuring reinsurance, cessions, exclusions, annual aggregate deductibles, allocated loss-adjustment expenses, brokerage, premium taxes, indexation, and sliding-scale premium terms. Some treaties use different day-count conventions or charge timing, so the signed wording controls.
Worked example
Assume a $1,000,000 xs $1,000,000 layer, a $200,000 initial premium, two reinstatements, a 50% first reinstatement rate, a 100% second reinstatement rate, and amount-only proration. Three events produce ground-up losses of $3,000,000 on day 120, $2,000,000 on day 220, and $1,500,000 on day 300.
The first event enters the layer for $1,000,000 and recovers $1,000,000. The second also recovers $1,000,000. The third enters for $500,000 and recovers $500,000. Total recovery is $2,500,000, the first reinstatement premium is $100,000, the second is $200,000, and net recovery after reinstatement premium is $2,200,000. Remaining aggregate capacity is $500,000.
Common questions
How is a reinsurance reinstatement premium calculated?
A paid reinstatement premium is usually the initial premium multiplied by the reinstatement rate and by the share of limit reinstated or consumed. If the wording is pro rata as to time, that amount is also multiplied by the unexpired portion of the policy year for the event that consumed the limit.
What does pro rata as to amount mean?
Pro rata as to amount means the charge follows the amount of limit used. If half of the original layer is consumed and the first reinstatement rate is 50%, the charge is half of 50% of the initial premium.
How does pro rata as to time change the premium?
Amount-and-time proration reduces the charge for events later in the policy year. This calculator uses the factor (365 minus the event day) divided by 365, so an event on day 365 has no time charge under that convention.
Does one catastrophe consume more than one occurrence limit?
In this model, no. Each event can recover no more than one occurrence limit, even if aggregate capacity remains because of reinstatements. Later events can use the remaining reinstated capacity.
Why can reinstatement premium reduce the value of a recovery?
Paid reinstatements are additional premium owed because the loss used capacity. A high reinstatement rate, high initial premium, or small recovery can make the net recovery meaningfully lower than the gross reinsurance recovery.