Retention / Deductible Optimizer
A higher retention cuts your premium but hands you more of every loss. Enter the premium your broker quoted at each retention, plus your own loss assumptions, and see the expected total cost of risk — and the bad-year downside — at each option. Every number is yours; the tool only does the arithmetic. Directional, not insurance advice.
e.g. 0.4 = one covered loss roughly every 2–3 years.
Your estimate. See the Breach Index for real sizes.
How many events in a bad year?
| Retention | Premium | Exp. retained loss | Exp. total cost of risk | Bad year |
|---|---|---|---|---|
| $25,000lowest | $42,000 | $10,000 | $52,000 | $117,000 |
| $50,000 | $34,000 | $20,000 | $54,000 | $184,000 |
| $100,000 | $27,000 | $40,000 | $67,000 | $327,000 |
What this optimizer does
- A higher retention (deductible) cuts your premium but hands you more of every loss — the optimizer shows the real trade-off instead of a flat guess.
- Enter the premium your broker quoted at each retention level, plus your own loss-frequency and severity assumptions, and it computes the expected total cost of risk at each option.
- It also shows the bad-year downside, because expected value alone hides the volatility a retention actually exposes you to.
- Every number is yours — the tool only does the arithmetic. Directional, not actuarial or insurance advice.
Why this matters
Brokers routinely offer the same tower at several retention levels, and the premium difference can be large enough to make a higher retention tempting. But the premium you save is money you keep only until a loss lands — then the retention is money you pay. The right choice is not the cheapest premium; it is the lowest expected total cost of risk you can also survive in a bad year.
This optimizer makes that trade-off explicit on your own quoted premiums and your own loss assumptions, rather than a flat estimate, so you can pick a retention deliberately. Directional and educational — confirm with your broker, who can model it against real loss data.
Frequently asked questions
What is a retention (or deductible) in cyber insurance?
The retention — often called the self-insured retention or deductible — is the portion of each loss you pay before the policy responds. A $50,000 retention means you absorb the first $50,000 of a covered claim and the insurer pays above that, up to the limit. Raising the retention lowers your premium because you are taking more of the risk; lowering it costs more premium but shifts more loss to the insurer. The optimizer helps you see where that trade sits for your own numbers.
How do I choose the right retention?
The honest answer is that it is a trade-off between premium saved and loss retained, weighed against how much volatility your balance sheet can absorb. The expected total cost of risk — premium plus the losses you expect to keep below the retention — gives you the average-case comparison. But you also have to look at the bad year: a retention you can afford once may be painful if two or three events land in the same period. This tool shows both the expected-value comparison and the bad-year downside so you can pick a retention you can live with, not just the cheapest on paper.
Where do the numbers come from?
From you. You enter the premium your broker actually quoted at each retention level, and your own assumptions about how often you expect a covered loss and how large it typically is. The tool does not invent benchmarks or industry averages — it simply does the arithmetic on your inputs, because a made-up frequency or severity figure would produce a confident but meaningless recommendation. For grounding on real loss sizes, see the Breach Index.
Is this actuarial or insurance advice?
No. Real retention optimisation uses an insurer’s or broker’s loss models, aggregate caps, correlation assumptions and your full financial picture. This is an educational calculator that makes the premium-versus-retained-loss trade-off visible on your own inputs, so you can have a sharper conversation with your broker. Confirm the decision with them.
This tool is free and always will be. Would a Pro workspace — saved designs, team sharing and exports — be worth paying for?
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