Claims Incurred

Claims that have occurred, irrespective of whether or not they have been reported to the insurer. (01) In the context of a particular year of original, all claims (whether reported or not) arising out of incidents in that year; (02) In the context of a revenue account under one year accounting the amounts paid on claims during the year plus the increase in the total reserves for outstanding claims over the year. (a decrease in reserves being treated as a negative increase). (03) In the context of three year accounting, all claims (whether reported or not) arising from the underwriting year of cover as determined at the time of closure of the account. Typically, incurred claim values include some expenses of payment claims such as those allocated to individual claims.

Claims Made Basis Reinsurance Agreements

The provision in a reinsurance contract that affords coverage for claims that occur and are made during the contract term, for losses that occur on or after the retroactive date specified in the contract. Claims reported during the term of the reinsurance agreement are therefore covered regardless of when they occurred. A claims made agreement does not cover claims reported after the term of the reinsurance contract unless the reporting period is extended by special agreement.

Claims Made Coverage

The provision in a policy of insurance that affords coverage only for claims that are made during the term of the policy for losses that occur on or after the retroactive date specified in the policy. A claims made policy is said to “cut-off the tail” on liability business by not covering claims reported after the term of the insurance policy unless the reporting period is extended by special agreement. (Also see Occurrence Coverage).