Mutual Reinsurance Bureau | 1780 S. Bell School Rd | P.O. Box 398 | Cherry Valley, IL 61016 | 815-332-3155ph, 815-332-3265 fax

Regional Reciprocal Catastrophe Pool (RRCP)

RRCP Home :: Strengths :: Underwriting Requirements :: Participants

Analyzing Loss Potential to RRCP Participants

"Spread" of business is the single most important key to the success of the RRCP. Our underwriting goal is to limit the potential loss at the 250 year return time "one event" to four total losses. Our Pool limit of $52,500,000 would, therefore, have a "maximum foreseeable loss" of $210,000,000 in one event. The catastrophe modeling results tell us, however, that it is very unlikely that the Pool would suffer even two or three total losses in the same event.

We analyze company exposures by state and county to develop RRCP expected losses over various periods of time. Since the Pool is truly a reciprocal and the Pool exposures are well spread, no profit margins or "accumulation surcharges" have to be figured into the individual contract prices. We do add (as do all reinsurers) a consistent percent load to the model-generated pure expected loss amounts for what we term "fluctuation and aberration." However, as the RRCP is a reciprocal pool, any ultimate overcharges accrue directly to the participants, not to outside reinsurers.

PRIDE...STRONG RELATIONSHIPS...DISTINCTION

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1780 S. Bell School Rd | Cherry Valley, IL 61016 | 815-332-3155 ph. | 815-332-3265 fax