What losses must an employer pay when purchasing specific excess insurance for catastrophic workers compensation losses?

When an employer purchases specific excess insurance for catastrophic workers’ compensation losses, this type of policy is designed to cover losses that exceed a specified retention limit. The retention limit represents the amount of loss the employer agrees to absorb before the excess insurance kicks in. Therefore, the employer is responsible for paying losses up to that specified retention threshold for any individual occurrence.

Once the losses exceed this threshold, the specific excess insurance provides coverage for the remainder, thus protecting the employer from catastrophic financial loss. This mechanism ensures that employers retain a portion of risk while transferring the excess risk to the insurance provider, allowing them to manage potential claims more effectively.

In contrast, while other options mention varying scopes of loss coverage, such as paying all losses or half of the total losses, they do not align with the specific structure of excess insurance, which focuses on losses over the defined retention threshold. Thus, understanding how specific excess insurance operates is essential in grasping the financial responsibilities of employers regarding catastrophic workers' compensation claims.