How to calculate the eml estimated maximum loss?

Answer 1

First of all you need to clarify the types of risks and the limits which you are ready to accept for ex. per office you are ready to accept 1mln and per shop 500K.

Then you need to check, is this risk already insured by your company or not, becouse in case if it is already insured part of it or contents you will have comulation.

then you need to check survey report and clarify the point of spreading for ex. fire risk and damage that it can make, if for example you have wooden floore in 2 storey building it means that the contents loss will be 100% due to fire and fall from second to the first floor.

thent in case of food stock the EML will be 100% becouse of contamination due to fire or smoke.

so at the final you have approximate EML on building 60-70% stock for example 100%

building value 1 mln (700K EML) stock 5mln (EML 1mln) = 6mln EML

then you are calculating your acceptance limit

as I said in the first sentence yuo need to have acceptance limit per risk type and lets imagine that the warehose acceptance limit in our company is 2 mln

2 000 000 (acceptance limit)/6 000 000 (EML) * 100 = 33%

but it is better not to accept the full 33% take 30% to allow a margin for future increase in the sum insured