Aggregate excess of loss

Textbook case: seven hail episodes at 3, 11, 4, 9, 1.5, 14 and 6 million, none of which reaches a 20 million per-event retention. The filter drops the 1.5, the retained aggregate is 47 million, and a 25 XS 40 cover pays 7 million. An aggregate excess of loss treaty adds up, over a period that is usually the underwriting year, every loss that meets the contract conditions. It responds only once that total exceeds an annual aggregate deductible. Per occurrence cover compares each event on its own to the retention; stop loss works on a loss ratio rather than an amount. A per loss filter, the qualifying deductible, commonly screens small claims out of the total, so the cover answers a build-up of meaningful events rather than attritional experience. The problem it solves is frequency. A season that stacks six medium windstorms, none of which reaches the per occurrence retention, can cost more than one large event, and the classical forms leave it uncovered. Aggregate cover fits that profile exactly. It has become one of the most sought after structures on secondary perils, hail, flood and wildfire, whose losses grow by accumulation rather than by single peak.