It stands for rate on line; a measure of an insurance or reinsurance company’s gross profitability, which relates insurance premiums to the line (line amount: insurance or reinsurance limit) provided by the company. In equation form, rate on line is expressed as follows:

ROL = premium / line

In other words, rate on line is the ratio of premium paid to loss recoverable in insurance/ reinsurance contracts, which measures the amount of money an insurer pays for  reinsurance coverage. The higher the ROL, the more an insurer has to pay for coverage, and vice versa.

For example, a $5 million catastrophe cover with a premium of $1 million would result in a rate on line of 20%.

The inverse of this ratio is known as the payback or amortization period. In the above example, the payback period is 5/1= 5 years.