What method involves the insurer paying the amount of each claim up to a predetermined limit while the reinsurer covers the excess?

The method where the insurer pays the amount of each claim up to a predetermined limit, with the reinsurer covering any excess, is known as excess of loss reinsurance. In this arrangement, the insurer retains a portion of the risk (the predetermined limit), and once claims exceed that limit, the reinsurer steps in to cover the additional costs. This creates a safety net for the insurer, allowing them to manage potential catastrophic losses more effectively by capping their exposure.

This structure is particularly beneficial for insurers dealing with large claims, as it helps stabilize their financial position and protects them from significant losses. In contrast to coinsurance, where all parties share losses proportionately, excess of loss specifically delineates the responsibilities of the insurer and reinsurer based on the set limits. Loss adjustment pertains more to the process of evaluating and settling claims rather than their financial coverage, while reinsurance excess isn't a recognized term in the context of reinsurance methods.