What loss limit is typically non-reimbursed under reinsurance?

In the context of reinsurance, the typical loss limit that is non-reimbursed is linked to losses below a certain threshold. This threshold is often referred to as a retention limit or attachment point, where the primary insurer is responsible for covering losses up to that specified amount. Once losses exceed this threshold, the reinsurer becomes liable for covering the additional losses, subject to the terms and limits of the reinsurance agreement.

The reasoning behind this setup is to incentivize insurers to maintain a certain level of risk management and not to seek reinsurance for every minor loss. By defining a loss threshold, reinsurers can contain their exposure, ensuring that coverage remains economically viable while also encouraging primary insurers to manage their risks effectively.

In contrast, the other options do not accurately represent the typical non-reimbursable losses under reinsurance arrangements. For example, total losses incurred by the insurer encompass all losses, and losses covered under exclusions are typically not eligible for reimbursement due to the specific terms of the policy. Lastly, losses above the reinsurance limit are explicitly covered by the reinsurer and therefore do not fall into the category of non-reimbursed losses.