Calculate rate on line (premium ÷ limit) and payback period for excess, umbrella and reinsurance layers.
How the rate on line calculator works
Rate on line expresses a layer’s premium as a percentage of its limit. It is the standard way to compare excess and reinsurance pricing across layers of different size.
Formula
Rate on line = Layer premium ÷ Layer limit. Payback period = 1 ÷ Rate on line.
How to use it
Enter the premium charged for the layer.
Enter the layer limit and attachment point.
Read the rate on line and payback period.
Worked example
A $5M xs $5M layer priced at $125,000 has a 2.5% rate on line and a 40-year payback.
Frequently asked questions
What is a good rate on line?
It depends on how likely losses are to reach the layer. Low layers that are hit often carry high rates on line; remote top layers carry low ones.
What does the payback period mean?
How many years of premium it takes to pay for one full-limit loss.
Related calculators
Increased Limits Factor Calculator — Price higher liability limits from a basic-limits premium with increased limits factors (ILFs), and see the cost of each additional layer.
Combined Ratio Calculator — Calculate the combined ratio — loss & LAE ratio plus expense ratio — with statutory or GAAP basis, underwriting profit and operating ratio.
Loss Ratio Calculator — Calculate the insurance loss ratio (incurred losses ÷ earned premium), with or without LAE, against a target.