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 this public reinsurer. 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.
CCR’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.