Carry ForwardTo qualify for Insurope's loss-carry-forward multinational pooling system, a total of 200 insured units and a minimum of two countries are required.
Payment of the multinational dividend depends on the total number of units covered, according to the following scale :
200 - 499 units, payment is made over three years with 50% in year one, 75% in year two and 100% in year three.
500 - 999 units, payment is made over two years with 50% in year one and 100% in year two.
+1,000 units, 100% is paid in the first year.
It will be seen that this "accumulation period" technique for pools of less than 1,000 lives constitutes a pooling system with a contingency fund. Accordingly, the risk charge of Insurope is generally lower than that of its competing networks which offer for the same number of lives a loss-carry-forward system without contingency fund.
Within the carry forward system there is an overall loss limitation provision. Under the LCF system if, at the end of an accumulation period, the loss carried forward is greater than a given multiple of the latest year's risk premium, the excess over this amount is borne by the network. The multiple is four if there are 200 to 499 units; three if there are 500 to 999 units; and two if there are 1,000 units or more.
Insurope provides great flexibility in allowing clients to discuss these loss cancellation limits adjusting the risk charge accordingly. This allows clients to tailor make their own arrangement in terms of risk borne allowing them to reach a compromise in terms of retention between stop loss and carry forward pooling systems.
In addition, the excess of a single claim above the free cover limit is absorbed by Insurope. If required, lower limits on a single claim can be arranged. Pools in a loss position are enlarged without subsequent surplus from new plans being used to offset existing losses.