Each GAREAT Section has its own Annual Aggregate Excess of Loss reinsurance mechanism, although the same principles apply to both sections.
A first (co-reinsurance) layer is mutualised between the Members of a same section in accordance with a distribution key which is obtained by expressing the GAREAT‘s premiums ceded by the Member as a percentage of the total premiums ceded to GAREAT by all the Members under the same section.
In the case of the Large Risks Section, above this first (co-reinsurance) layer, several layers are reinsured by international Reinsurers up to the level at which the French State intervenes. The unlimited coverage is granted under a global Stop Loss reinsurance treaty reinsured 100% by Caisse Centrale de Réassurance (CCR). In order to benefit from coverage under this global unlimited treaty, an insurance company must be a Member of GAREAT.
In the case of the Small and Medium-sized Risks Section, with effect from 1st January 2013 (and upon its Members’ instructions), GAREAT will negotiate with CCR the unlimited coverage which is the subject of a treaty reinsured 100% by CCR. This treaty consists of several sections and will come into play as a “common account” protection for GAREAT’s reinsurance programme placed with international reinsurers.
Caisse Centrale de Réassurance’s unlimited treaties only cover losses affecting risks which fall within the scope of application of Article L 126-2 of the Insurance Code. Losses not falling within this scope fall back into the Members’ retention.