Author: pmo

Incurred Losses: Incurred Losses refer to the total amount of losses that an insurer has experienced during a particular period, usually a policy year. This includes both the claims that have been paid during the period and the loss reserves that have been set aside to cover claims that have been reported but not yet…

Treaty: A Treaty is a type of reinsurance agreement that is mandatory between a ceding company and a reinsurer. It contains the contractual terms and conditions that apply to the reinsurance of a particular class or classes of business. It is a general agreement that covers a broad range of risks, as opposed to a…

Underwriting year: The underwriting year refers to the duration of time for which an insurance policy is in effect. It can be a single or multiple years, and it starts either from the effective date of the policy or form an anniversary of that date. EXAMPLE: If an Insurance Policy is in effect from January…

Occurrence Policy: An occurrence policy is a type of liability insurance policy that is triggered when the injury or damage occurs, regardless of when the claim is reported or paid. This means that coverage applies to claims made during the policy period, as well as claims made after the policy period has ended, as longas…

Claims – made Policy: A claims – made policy is a type of liability insurance policy that is triggered when acclaim is first reported to the insurer. This means that coverage applies only to claims made during the policy period, regardless of when the underlying event causing the claim occurred. The policy may also have…

Claims – Paid Policy: A claims made policy is a type of liability insurance policy that is triggered when a claim is paid. This means that coverage applies only to claims made and paid during the policy period ,regardless of when the underlying event causing the claim occurred. EXAMPLE: A company purchases a general liability…

Outstanding Loss Reserves(OSLR)-Assumed: Outstanding Loss Reserves and also known as specific Reserves. This is the Reserve maintained for a policy to cover all future expected Losses. OSLR Recovered (ceded): This includes the OSLR maintained on the policy Reinsured. EXAMPLES: OSLR: An Insurance company sets aside $10,000 in OSLR for a policy that covers abuilding. They…

Loss Adjustment Expenses (LAE) are expenses directly related to a claims. Allocated Loss Adjustment Expenses (ALAE) are expenses which can be allocated to a particular claim. Unallocated Loss Adjustment Expenses (ULAE) which can not be allocated to a particular claim and is general in nature. Examples: ALAE: Fees paid to lawyers, experts, and investigators used…

Incurred But Not Reported(IBNR) –Assumed: An estimate of the amount of an insurer’s (or self-insurer’s) liability for claim-generating events that have taken place but have not yet been reported to the insurer or self – insurer. The sum of IBNR losses plus incurred losses provides an estimate of the insurer’s eventual liabilities for losses during…