Rate on Line (ROL)
The premium paid as a percentage of the reinsurance limit. The primary pricing metric for excess-of-loss reinsurance.
Rate on line (ROL) is the annual premium expressed as a percentage of the reinsurance limit. It is the standard pricing metric for excess-of-loss reinsurance and catastrophe bonds.
A $100m cat bond with an ROL of 5% pays investors $5m annually (5% of $100m). ROL is directionally equivalent to the coupon on a bond — higher ROL means more income for the investor (and higher cost for the cedant), typically reflecting higher expected loss or greater demand for protection.
ROL is distinct from rate — "the market is firming" means ROLs are increasing across the board. After major catastrophe events, ROLs can spike dramatically as capacity withdraws and demand for protection surges. The 2023 reinsurance renewals saw catastrophe ROLs increase 30–50% in some peak zones.
Example usage
“Florida property catastrophe reinsurance ROLs increased 45% at the June 1 renewal following two consecutive above-average hurricane seasons.”
Frequently asked questions
What is Rate on Line (ROL)?
The premium paid as a percentage of the reinsurance limit. The primary pricing metric for excess-of-loss reinsurance. Rate on line (ROL) is the annual premium expressed as a percentage of the reinsurance limit. It is the standard pricing metric for excess-of-loss reinsurance and catastrophe bonds.
How is Rate on Line (ROL) used in practice?
Florida property catastrophe reinsurance ROLs increased 45% at the June 1 renewal following two consecutive above-average hurricane seasons.
Related terms
More Reinsurance terms