🤾♂️ Module 8 - Occurrence vs. Claims Made Flashcards
Pull the Trigger: Occurrence vs. Claims-Made
Coverage Trigger
Incident that engages an insurance policy
CG 0002
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
Full Prior
Full Prior Acts Coverage
- Covers all losses back to the company’s inception
- Used in claims made policy
ERP
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
Retro date
- Date that coverage retroactively applies
- Used in claims made policy
Legal Defense
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
Typical Claims-Made Coverages
- Professional Liability
- Medical Malpractice
- Directors & Officers
- Employment Practices Liability
- Pollution
Designed to assist with long-tail loss development coverage
5 Characteristics of Claims-Made Policy
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
5 Pitfalls in E & S Policies
- 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
Admitted
Admitted Carrier or Admitted Policy
Rates and forms are filed with state(s) insurance department(s)
Non-Admitted
Non-admitted Carrier or Non-admitted Policy
Rates and forms are NOT filed with state(s) insurance department(s)
E&S
Excess & Surplus
Non-admitted (also called “non-standard”) carrier and/or policy
Earned Premium
Premium earned by the carrier and thus owed to the carrier
Unearned Premium
Portion of premium that has not been used by the insured, or produced by the carrier, that is typically refunded to the insured.
MEP
Minimum Earned Premium
Stated percentage of premium that is fully earned at policy inception