Glossary

Rate on line

The premium for a layer of reinsurance or excess coverage divided by that layer's limit, showing the price paid for each dollar of protection.

Also called: ROL, rate-on-line, ROL percentage

Rate on line is premium divided by limit. Say a $50 million layer of catastrophe reinsurance costs $5 million: the rate on line is $5 million ÷ $50 million, or 10%. Invert it and you get the payback period, 1 ÷ 10% = 10 years. That is how many years of premium add up to one full-limit loss, so the price implies the market expects that layer to be exhausted roughly once a decade.

Layers close to where losses normally occur carry high rates on line, while layers far above them carry low ones. A top layer at 2% implies a 50-year payback. Brokers and reinsurers quote it because comparing price changes by rate alone misleads when limits and attachment point values move at renewal. In a hard market rates on line rise across the program; in a soft market they fall.

The same measure appears in excess liability, representations and warranties insurance and the pricing of catastrophe bonds, where it shows the coupon for a given trigger.

The pitfall is treating it as a loss forecast. Rate on line includes the reinsurer's expenses, profit margin and cost of capital, and it ignores differences in terms such as reinstatements and exclusions. It is a price indicator, not an expected loss. The guide on The January 1 reinsurance renewals explained: the 2026 results shows how ROL moves with each renewal season, and how reinsurance pricing flows into business insurance premiums traces the effect on the premium a business pays.

Last reviewed October 10, 2026

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Related terms

Attachment point The loss amount at which an excess, umbrella or reinsurance layer starts paying, normally the top of the underlying limits or retention beneath it. Treaty reinsurance A reinsurance contract that automatically covers a defined portfolio of an insurer's policies, instead of reinsuring one risk at a time. Catastrophe bond A security sold to investors that pays interest but loses principal if a defined catastrophe occurs, giving an insurer or reinsurer multiyear protection. Hard market The phase of the insurance cycle when premiums rise, coverage tightens and insurers cut capacity and become pickier about who they will insure. Soft market The phase of the insurance cycle when capacity is plentiful and insurers compete on price, so premiums flatten or fall and terms loosen.

Related guides

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