Sutton Reinsurance Products

$5M per person

$10M per occurrence











Workers’ Compensation Catastrophe Reinsurance

Sutton Reinsurance offers Workers’ Compensation Catastrophe Reinsurance on a per occurrence basis only. This means the reinsurance will respond to losses involving more than one life. This product is offered via HCC syndicate #4141 at Lloyd’s.


Product need and use:

The Catastrophe Excess of Loss coverage protects the insurer against the risk of a large loss involving several lives that could arise from a catastrophic accident.

It can be written on a facultative basis, for a single policy, but is most commonly a reinsurance treaty, which covers the reinsured’s portfolio of defined classes of risks. The following notes pertain to the Cat XL treaty:


Workers Compensation Catastrophe Subject Insurance:

Key Features of Workers Compensation Insurance:

  1. Benefits are prescribed by state law.
  2. Each state has a unique benefit structure.
  3. Medical benefits are unlimited and lifetime.
  4. Death benefits are based on salary, marital status and number of dependents.In many states they are capped.
  5. Disability benefits are based on salary, marital status and number of dependents. The publication “Analysis of Workers’ Compensation Laws” by the US Chamber of Commerce statistics and research center provides a description of the benefits prescribed by each state.


Workers Compensation Catastrophe Reinsurance Design/Options:

An accident is deemed to be catastrophic when it involves more than a certain number of lives. This number of lives can be implied by the attachment point, but is usually stipulated as a Life Warranty.

Per occurrence is defined as either (1) a “Maximum Any One Life” (MAOL) less than or equal to the attachment point or (2) at least a two-life warranty. Even with a two-life warranty an MAOL must be stated as per person limits, as well as per occurrence limits must be adhered to when writing catastrophe risks.

Limits provided are often high and divided into layers in which one or more Reinsurers take a share.


Information Requirements:

  1. Premium volume of business.
  2. Breakdown of business by Occupational Class Codes.
  3. Profile of business by Size of Employee Groups.
  4. Geographic distribution of business.
  5. Profile of largest policies by Hazard Group (number of employees, premium volume).
  6. Breakdown of business by Hazard Group.
  7. Details on corporate- or privately-owned aircraft.
  8. Five-year claims history:
    • From ground up to show how close losses have come to the attachment point.
    • Showing losses on an “as if” basis to determine which losses have or would have impacted the coverage.