🤾‍♂️ Module 8 - Occurrence vs. Claims Made Flashcards

Pull the Trigger: Occurrence vs. Claims-Made

1
Q

Coverage Trigger

A

Incident that engages an insurance policy

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2
Q

CG 0002

A

Commercial General Liability Coverage Form
* “Claims Made Form”
* Coverage is “triggered” by the date the claim is reported
* The claim must occur AND be reported during the policy period
* Designed to assist with long-tail loss development coverage
* Improves actuarial and rate accuracy

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3
Q

Full Prior

A

Full Prior Acts Coverage

  • Covers all losses back to the company’s inception
  • Used in claims made policy
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4
Q

ERP

A

Extended Reporting Period

  • Usually referred to as “Tail Coverage”
  • Extends period of time that a claim can be reported
  • Typically 12, 24 or 36 months
  • Used in claims made policy
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5
Q

Retro date

A
  • Date that coverage retroactively applies
  • Used in claims made policy
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6
Q

Legal Defense

A

The costs associated with defending a claim
* Typically does NOT reduce liability limits in Occurrence form
* Can be inside or outside of liability limits in Claims Made form

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7
Q

Typical Claims-Made Coverages

A
  • Professional Liability
  • Medical Malpractice
  • Directors & Officers
  • Employment Practices Liability
  • Pollution

Designed to assist with long-tail loss development coverage

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8
Q

5 Characteristics of Claims-Made Policy

A

Retro date
Pricing typically lower than occurrence in first year
Pricing increases each year as exposure “stacks”
Tail coverage at end or when written
Typically excess & surplus market

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9
Q

5 Pitfalls in E & S Policies

A
  • Premium typically due in full at inception
  • Additional finance charges if premium is financed
  • Taxes and additional fees are typically applied
  • Minimum earned premium (usually 25%) typically applied
  • Minimum & Deposit Premiums sometimes applied
    • Premium is 100% fully earned
    • No refund for cancellation or even if audit comes in lower
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10
Q

Admitted

A

Admitted Carrier or Admitted Policy

Rates and forms are filed with state(s) insurance department(s)

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11
Q

Non-Admitted

A

Non-admitted Carrier or Non-admitted Policy

Rates and forms are NOT filed with state(s) insurance department(s)

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12
Q

E&S

A

Excess & Surplus

Non-admitted (also called “non-standard”) carrier and/or policy

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13
Q

Earned Premium

A

Premium earned by the carrier and thus owed to the carrier

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14
Q

Unearned Premium

A

Portion of premium that has not been used by the insured, or produced by the carrier, that is typically refunded to the insured.

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15
Q

MEP

A

Minimum Earned Premium

Stated percentage of premium that is fully earned at policy inception

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16
Q

M&D Premium

A

Minimum & Deposit Premium
* Typically 100% of premium fully earned by the carrier at policy inception
* Non-refundable for early cancellation or after audit