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.
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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).

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.

A method of dividing the cost of insurance purchased for the organisation and apportioning it among the cost centres based on claims experience. The aim is to ensure that each part of the company contributes to total insurance costs in a manner reflecting its own claims record. It encourages loss prevention.

An excess of loss treaty with a retention higher than the limits on any one reinsured policy or contract. The agreement covers the reinsured’s exposure to multiple retentions when two or more policies (perhaps from different lines of business) are involved in the same occurrence in an amount that exceeds the clash cover retention.

UK: a category of insurance business, as set out for regulatory purposes in Schedules 1 (general business) and 2 (long term business) to the Regulated Activities Order (Contracts of Insurance).
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A group of policyholders who have the same characteristics and are grouped together to be rated.
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Group of insureds who have similar exposures and experience and are grouped together for rating purposes.
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MEDICAL,USA: Groups or categories of individuals with similar characteristics and risks for the purpose of setting insurance rates or to determine the amount of coverage for which a person is eligible under an insurance policy.
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The Underwriting or rating group into which a particular risk must be placed. Pertains to type of business, location, and other factors. Classifying persons, property or operations as a basis for tabulating statistical experience and determining premium rates. The individual class. The hazards of operating an automobile vary with respect to the type of car and the purposes for which it is used. Therefore, automobile Insurance groups private passenger cars. trucks, taxi cabs and automobiles operated by garages in different classifications to determine premium rates.

Any pension scheme member who is not a Class B or Class C member. Class A embraces members of schemes established on or after 14 March 1989 and all new members of earlier schemes joining on or after 1 June 1989. The maximum retirement benefit for Class A on retiring between ages 50 and 75 is two-thirds of final remuneration. The earnings cap applies. The tax-free lump sum on retirement is 3/80ths of final salary for each year of service (not exceeding 40 years) or, if greater, 2.25 times the annual pension.

A legal procedure one party, or group, brings against a defendant as representative of a larger group. Deep vein thrombosis sufferers have acted against airlines in this way. The Civil Procedure Rules use the term ‘group litigation’ while the Legal Services Commission refers to ‘multi-party actions. UK proceedings are issued under the Group Litigation Order.

Any pension scheme member who, on or after 17 March 1987 and before 1 June 1989, joined the scheme, being a scheme which commenced before 14 March 1989, or whom the IR has agreed to be a Class B member by virtue of previous membership of a relevant scheme and, in either case has not opted to be a Class A member. The earnings cap does not apply to Class B.

A pension scheme member who joined before 17 March 1987 or who joined subsequently and whom the IR has agreed to be a Class C member by virtue of previous membership of a relevant scheme, and, in either case, has not opted to be a Class A member. The earnings cap does not apply to Class C members.

Defined by the FSA as ‘any class of insurance listed in Schedule 1 to the Regulated Activities Order (Contracts of insurance) 2001. See REGULATED CLASSES OF INSURANCE; LONG-TERM BUSINESS; GENERAL INSURANCE BUSINESS.