{
  "id": "clause-loss-ratio-cap",
  "type": "clause",
  "languages": {
    "en": {
      "id": "clause-loss-ratio-cap",
      "lang": "en",
      "type": "clause",
      "title": "Loss Ratio Cap Clause",
      "shortDefinition": "The loss ratio cap clause limits the reinsurer's liability under a proportional treaty to a maximum loss ratio, above which any further loss reverts to the cedent.",
      "synonyms": [
        "Loss ratio cap"
      ],
      "linesOfBusiness": [
        "Reinsurance"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Reinsurance",
        "Risk sharing"
      ],
      "relations": {
        "relatedTerms": [
          "term-proportionale-rueckversicherung",
          "clause-loss-corridor"
        ],
        "partOf": [],
        "appliesTo": [
          "term-proportionale-rueckversicherung"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "limitation",
        "origin": "reinsurance-market",
        "favours": "insurer",
        "negotiability": "negotiable",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/en/knowledge/clause/loss-ratio-cap-clause/",
      "alternateUrl": "https://hgh.ch/lexikon/de/wissen/klausel/loss-ratio-cap-klausel/",
      "body": "## Purpose\n\nProportional treaties could theoretically expose the reinsurer to unlimited liability in a catastrophic loss year, since the cession percentage applies regardless of the absolute loss amount. The loss ratio cap clause sets an upper limit – for example 200 percent of premium – above which the reinsurer makes no further payments.\n\n## Effect and limits\n\nThe cedent bears losses above the cap entirely on its own account, which can create a substantial burden in extreme years. The clause is usually combined with additional non-proportional cover (stop-loss or aggregate XL) to specifically address these peaks.\n\n## Negotiation and practice\n\nCalibrating the cap is based on historical loss ratio distribution and the risk appetite of both parties; a cap set too low shifts significant risk back to the cedent, while a cap set too high barely reduces the premium-saving effect."
    },
    "de": {
      "id": "clause-loss-ratio-cap",
      "lang": "de",
      "type": "clause",
      "title": "Loss-Ratio-Cap-Klausel",
      "shortDefinition": "Die Loss-Ratio-Cap-Klausel begrenzt die Haftung des Rückversicherers unter einem proportionalen Vertrag auf eine maximale Schadenquote, oberhalb derer der Zedent den weiteren Schaden selbst trägt.",
      "synonyms": [
        "Schadenquotenobergrenze"
      ],
      "linesOfBusiness": [
        "Rückversicherung"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Rückversicherung",
        "Risikoteilung"
      ],
      "relations": {
        "relatedTerms": [
          "term-proportionale-rueckversicherung",
          "clause-loss-corridor"
        ],
        "partOf": [],
        "appliesTo": [
          "term-proportionale-rueckversicherung"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "limitation",
        "origin": "reinsurance-market",
        "favours": "insurer",
        "negotiability": "negotiable",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/de/wissen/klausel/loss-ratio-cap-klausel/",
      "alternateUrl": "https://hgh.ch/lexikon/en/knowledge/clause/loss-ratio-cap-clause/",
      "body": "## Zweck\n\nProportionale Verträge könnten den Rückversicherer bei einem katastrophalen Schadenjahr theoretisch unbegrenzt belasten, da die Zessionsquote unabhängig von der absoluten Schadenhöhe gilt. Die Loss-Ratio-Cap-Klausel setzt eine Obergrenze – etwa 200 Prozent der Prämie –, oberhalb derer der Rückversicherer keine weiteren Zahlungen mehr leistet.\n\n## Wirkung und Grenzen\n\nDer Zedent trägt Schäden oberhalb des Caps vollständig selbst, was in Extremjahren zu erheblicher Eigenbelastung führen kann. Die Klausel wird meist mit einer zusätzlichen nicht-proportionalen Deckung (Stop-Loss oder Aggregate-XL) kombiniert, um genau diese Spitzen abzudecken.\n\n## Verhandlung und Praxis\n\nDie Kalibrierung des Caps orientiert sich an der historischen Schadenquotenverteilung und dem Risikoappetit beider Parteien; ein zu niedriger Cap verschiebt erhebliches Risiko zum Zedenten zurück, ein zu hoher Cap mindert den Effekt der Prämienersparnis kaum."
    }
  }
}