Insurance companies need insurance too.
Because global pandemics are unpredictable.
Abnormal Mortality Stoploss Reinsurance
Abnormal Mortality Stoploss (AMSL) protects life insurance portfolios against unusual or unexpected mortality results. The AMSL product from Sutton Reinsurance is designed as cost-effective protection against the effects of an epidemic/pandemic on a life insurer’s portfolio and can also serve as catastrophe protection.
LIMITS:
$5M per person
$20M per occurrence
Product need and use:
AMSL Reinsurance protects a company against having greater than expected mortality claims in the aggregate in a given calendar year.
An insurer considering AMSL coverage may, or may not, have Catastrophe Reinsurance (CAT) coverage. If a company has CAT, then catastrophe occurrences should be excluded from the AMSL coverage as it is assumed that the catastrophe coverage will respond to these events. This can be accomplished by excluding losses that involve three or more lives from the AMSL coverage.
If an insurer does not have a catastrophe cover, the AMSL coverage will respond to catastrophe events by pushing the aggregate claims excess of the AMSL coverage attachment point. The effective catastrophe limit is then equal to the limit of the AMSL coverage. The Reinsured should be aware that there is only one limit provided by the AMSL coverage. Therefore, if there is a catastrophe occurrence that causes a total loss under the AMSL coverage, there is no reinstatement of coverage. Typically, catastrophe coverage will provide one reinstatement and thus provides the reinsurer a full coverage limit for two separate events.
Additionally Life Insurers are exposed to the risk of pandemic/epidemic adversely impacting their mortality experience. The AMSL coverage will protect life insurers against this risk.