Loss Occurrence

Loss Occurring The term loss occurring in insurance can have slightly different meanings depending on the context, but generally it refers to the timing of when a covered loss is considered to have happened for the purposes of claims and coverage. Here are two main areas where you might encounter loss occurring. 1- Reinsurance treaties: In reinsurance, a "loss occurring" treaty means that the reinsurer's responsibility for a claim begins when the event causing the loss actually happens, regardless of when the claim is reported to the insurance company or the reinsurer. This contrasts with "risk attaching" treaties, where the reinsurer's responsibility starts on a specific date, irrespective of when the loss event occurs. Loss occurring treaties are typically used for claims with long tails, meaning they can take a long time to develop and report, such as environmental or asbestos liability claims. This approach ensures that the reinsurer remains responsible for its share of the claim even if it's reported years after the initial event. A reinsurance contract specifies its period of effect: date of inception and date of termination. But the period during which the treaty produces its effects is not to be confused with the period of coverage. The period of coverage determines the period during which the Re-insurer will be responsible for the claim in respect with the policies or risks ceded during the period of effect of the treaty. This period of coverage might be loss occurring, risk attaching or accounting year. 2-Occurrence-based insurance: In some types of insurance, particularly liability insurance like professional liability or directors and officers (D&O) insurance, you might encounter the terms "claims-made" and "occurrence-based". Occurrence-based: Coverage is for losses that happen during the policy period, regardless of when the claim is reported. This means if the event causing the loss occurs during the policy period, even if the claim is reported later, it's covered. Therefore, understanding the context in which "loss occurring" is used is crucial. In reinsurance, it refers to the timing of the loss event itself, while in occurrence-based insurance, it's related to the timing of the claim reporting in comparison to the loss event and policy period. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful