Excess of loss contracts are generally arranged for a period of one year, say from 1st January to 31st December. If any loss occurs during the specified period, it will fall within the scope of the contract though the policies under which such losses arise may have incepted prior t the date of commencement of excess of loss cover. The Ceding Company would normally arrange for the renewal of the contract to ensure continued protection for the run-off portfolio and for new risks attaching during the next annual period.

REINSURANCE: Losses (reported or not reported) which have occurred but have not been paid.
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The amount of loss for which the Insurer is liable and which it expects to pay in the future.
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The claims not yet settled by an insurer, expressed in a summary statement.