What is stop loss in SAP FS-RI - Reinsurance?

SAP Term: stop loss

• Component: FS-RI

• Component Name: Reinsurance

• Description: A form of non-proportional reinsurance. This is a rare form of reinsurance that provides extensive protection against annual fluctuations. The reinsurer pays a portion of the cedent's annual loss burden that usually exceeds a deductible expressed as a percentage of the annual premium or an absolute but predetermined amount. If the loss ratio exceeds a specific percentage, the reinsurer has to pay. A stop loss evens out the cedent's annual results and protects against major losses as well against the accumulation of smaller and medium losses. Most other reinsurance coverage precedes stop-loss reinsurance, which means that only the annual aggregate loss is relevant for the primary insurer's retention. Specifically, loss payments must be subtracted from proportional reinsurance and from excess of loss per risk and per accumulation. Moreover, the coverage often relates to the losses that occurs during the treaty term. In this regard, no reference is made to single losses or loss events and con

Smart SAP Assistant

• Key Concepts: 
  Stop loss is a type of reinsurance contract that provides protection against large losses. It is used to limit the amount of risk an insurer takes on by transferring some of the risk to a reinsurance company. In the FS-RI Reinsurance component of SAP, stop loss is used to define the maximum amount of risk that an insurer is willing to take on for a particular policy or group of policies. 
  
  How to use it: 
  In SAP, stop loss can be set up in the FS-RI Reinsurance component. To do this, go to the Reinsurance Contract Definition screen and select “Stop Loss” as the type of contract. Then, enter the maximum amount of risk that you are willing to take on for the policy or group of policies. 
  
  Tips & Tricks: 
  When setting up a stop loss contract in SAP, it is important to consider the maximum amount of risk that you are willing to take on. This will help you determine how much coverage you need and how much you should pay for reinsurance. 
  
  Related Information: 
  For more information about stop loss and other types of reinsurance contracts, please refer to SAP’s documentation on FS-RI Reinsurance. Additionally, there are many online resources available that provide more detailed information about stop loss and other types of reinsurance contracts.