Claims & Protection Layers
Illustrative Claims Examples
In this sectionIllustrative Claims Examples
The following examples use the $250,000 premium / $50,000 Independent Account retention structure shown on the preceding page. They are illustrative only and not guarantees of actual claim outcomes or layer sizes.
Claim Amount: $35,000
- Independent Account — pays entire $35,000
- Group Account — not triggered
- Reinsurance — not triggered
The claim is absorbed entirely by the member’s own Independent Account. No shared program capital is used. Remaining equity continues to earn investment income.
Claim Amount: $180,000
- Independent Account — pays first $50,000
- Group Account — pays remaining $130,000
- Reinsurance — not triggered
Independent Account is exhausted for this occurrence. The shared Group Account covers the excess. Other members’ Independent Accounts remain untouched.
Claim Amount: $1,250,000
- Independent Account — pays first $50,000
- Group Account — pays next $450,000
- Reinsurance — pays remaining $750,000
All three layers respond. Independent Account and Group Account are capped at their retentions; external backup insurance via reinsurance absorbs the catastrophic portion and protects the mutual’s long-term capital.
In every case the Policy Issuer remains the named insurer on the admitted policy and coordinates payment to the third-party claimant. Behind that paper, the economic cost is allocated strictly according to the waterfall above.