Multiples of Retained Risk

downthesun

Hi,

Can someone give an example of this materiality standard?

thanks,

graham

If a homeowners insurance company provides hurricane insurance where the total value of the properties is say 10 billion, then a multiple of retained risk might be something like:

• 5% x 10 billion = 0.5 billion or 500 million

Saying "multiples" makes it sound like the materiality standard would be 5x or 10x the retained risk, but I believe it's just a fractional multiple.

downthesun

Thanks! That was the exact issue I was having with "multiples".