For individual surplus, I understand that the insurer pays (Retention limit/EML) x Claim or (Retention limit/Sum insured) x Claim.
What happens if the reinsurer states there is a maximum retention limit and a minimum retention limit? I'm assuming that you always use the maximum retention limit unless the EML or Sum insured is below this retention limit, then the minimum retention limit would be used. This would benefit the insurer right?
Please let me know if the above explanation is right!