ABSTRACT
We have seen how exposure curves may help pricing property business. With suitable adjustments, the same idea can be used to price liability business. The method is based on the use of the so-called increased limit factor (ILF) reference curves (Miccoli 1977; Palmer 2006; Riegel 2008). The key idea behind ILF curves is that they should help you determine how the expected losses increase by increasing the limit purchased, and ultimately that helps you determine the cost of reinsuring a specific layer of reinsurance.
