Reserves may be capped at which level with respect to any specific excess Worker's Compensation insurance?

• A. Retention level
• B. Policy limit
• C. Deductible per claim
• D. Premium cost

Answer: (A)

In excess workers’ compensation coverage, the insured must absorb losses up to a set amount called the retention (self‑insured retention). The excess policy only pays for losses that exceed that retention, up to the policy limit. Because the insured carries losses up to the retention, the loss reserves for that excess layer are effectively capped at that retention level—the insurer’s exposure starts after the retention is hit. The other options aren’t the cap that governs how reserves are set for this layer: the policy limit is the total the insurer will pay, a deductible per claim is another phrasing for the amount the insured pays before coverage in some contexts, and premium cost isn’t a reserve level.