Category: Reinsurance structures · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-05
Risk excess of loss (risk XL or per risk XL) is the form of excess of loss reinsurance that responds to losses arising from any single risk above an agreed retention. The cover is applied separately to each affected risk, irrespective of whether multiple risks are affected by a common event.
Category: Reinsurance structures Also known as: risk XL, per risk XL, WXL/R (working excess of loss on a per risk basis) Related concepts: catastrophe excess of loss, excess of loss reinsurance, working layer
Risk XL is distinguished from catastrophe XL by its ‘per risk’ application: a £10m XS £2m risk XL responds to any single risk loss exceeding £2m, up to £10m on that risk. If a single event affects ten risks, each generating a £4m loss, the risk XL pays £2m on each — a total of £20m, against an aggregate event loss to the cedant of £40m. Compare this with a £30m xs £25m catastrophe XL on the same event: this responds only when the aggregate event loss exceeds £25m, and pays a single £15m recovery.
Risk XL is typically the working layer of a property programme — the layer expected to see frequent claim activity from larger individual losses.
Risk XL contracts are documented under the Market Reform Contract format. The standard ‘follow the settlements’ and ‘follow the fortunes’ clauses apply. The duty of fair presentation under the Insurance Act 2015 applies to the cedant in placing the cover.
Risk XL is purchased to protect the cedant’s net retention on large individual risks. A property insurer might cede 30 per cent under a quota share, retain a £5m line and purchase risk XL of £20m xs £5m to limit its net retention on any single risk to £5m × 70 per cent = £3.5m.
Pricing is principally by exposure rating (modelling the expected loss in the layer based on the cedant’s exposure profile) and burning cost (extrapolating past loss experience to the current portfolio). Risk XL working layers typically price at higher rates on line (20–40 per cent) than catastrophe XL.
An illustrative example: a UK property insurer with a £5m retention purchases risk XL of £20m xs £5m, with one reinstatement at 100 per cent additional premium. On a £15m fire loss to a single industrial premises, the cedant retains £5m and recovers £10m under the risk XL. If a second £10m loss subsequently occurs on a different risk, the cedant pays the reinstatement premium and recovers a further £5m.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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