GI 301: Excess-layer data do not show the ground-up distribution directly
A reinsurance or excess-limit dataset can be truncated or censored by contract terms. The attachment and limit determine which parts of the loss are observed.
Original practice scenario
For an original 1m layer above 1m, a 3m ground-up loss produces a capped 1m payment. Several larger ground-up losses can generate that same payment. Explain why fitting a ground-up distribution to the capped payments without adjustment loses information.
Study check
Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.
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