A claims series event is a series of two or more claims arising from one specific common cause which is attributable (i) to the same fault in design, manufacture instructions for use or labeling of products, or (ii) to the supply of the same products and/or services or to products and or service showing the same defect.
Insurance Encyclopedia
Claims Settling Agent
One instructed on behalf of an insurer both to assess a loss and to pay it on the insurer’s behalf.
Claims Sharing Agreement
An agreement between two property and liability insurers that in the event of claims arising in which both are interested on behalf of different parties, such claims shall be shared between them on some specified basis without regard to the degree of legal responsibility of the respective policyholders.
Claims transfer
See: crossover claim.
Claims Underwriting and Exchange (CUE)
Database containing details of nearly all household and private motor claims over a six-year period. The purpose is to combat fraud such as multiple claims for the same loss or the staging of a series of incidents. Underwriters may search CUE at the underwriting stage and avoid ‘bad risks’. More usually they search CUE when checking the validity of claims.
Claims-made basis
A form of reinsurance under which the date of the claim report is deemed to be the date of the loss event. Claims reported during the term of the reinsurance agreement are therefore covered, regardless of when they occurred. A claims-made agreement is said to “cut off the tail” on liability business by not covering claims reported after the term of the reinsurance agreement—unless extended by special agreement.
Claims-made coverage
A type of public liability insurance that responds only to claims for injury or damage that are brought (to the insurer) during the policy period (or during a designated extended reporting period beyond expiration). This development was in response to long tail claims, such as those related to asbestosis injury, carrying over many years and multiple layers of coverage limits. However, most public liability policies are written on an occurrence basis, covering injury or damage occurring during the policy period even if a claim is brought months or even years later.
Claims-Made Insurance
Liability Insurance which covers claims brought against the insured during the Policy period and are reported during the Policy period, regardless of when the injury or harm giving rise to these claims occurred.
Claims-made policy
A liability policy covering all claims first notified during the policy year or any applicable extended reporting period regardless of when the injury or loss occurred. However, if the policy has a retroactive date the policy will not respond to events occurring before that date. Unlike the lossesoccurring policies, the policy ‘runs off’ at the end of the extended reporting period. See CLAIMS-MADE REINSURANCE; LIABILITY SEQUENCE.
***
Often a form of general or professional liability, there are two basic types of claims-made policy forms:Claims-Made and Reported FormLosses under this form are covered only if the incidence giving rise to the claim takes place and is reported during the policy period. If a claims-made policy is not renewed, an optional Extended Reporting Period (ERP) also known as a “tail” may be purchased. For a claim to be covered, it must occur and be reported either during the policy period or during the Extended Reporting Period.
Pure Claims-Made Form
Just as in the “claims-made and reported form” the claim must take place during the policy period or the extended reporting period. However, the reporting of the claim to the insurance company must be made “promptly” or “as soon as practical.” The key is to know what “triggers” a claim.
For example, suppose an employer receives a notice from the EEOC regarding an administrative hearing concerning employee discrimination and does not report it to the insurance company because there is no actual claim for damages or litigation. The employer has insurance coverage on a claims-made basis with a 60day ERP. Seventy-five days after the expiration of the policy the employer is sued for discrimination. There is no coverage under either a claims-made and extended reporting form or a pure claims-made form. The incident that “triggered” the claim took place when the notice was received from the EEOC had to be reported before the end of the 60-day ERP. (See Nose; Tail).
Claims-made reinsurance
An excess of loss reinsurance contract under which the reinsurer pays losses if the claim is made during the policy period in respect of occurrences after the retroactive date. It overcomes the difficulty associated with long tail cases of having to ascertain the time of the occurrence. The treaty usually incorporates an extended reporting period and incorporates the claims-made trigger of the underlying liability policy. Compare with LOSSES-OCCURRING REINSURANCE and see RISKS ATTACHING.