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📅 Losses-occurring basis is a reinsurance contract trigger under which the reinsurer responds to any loss that occurs during the treaty period, regardless of when the claim is eventually reported or settled. This stands in contrast to a claims-made basis, where the report date determines which contract period applies, and a risks-attaching basis, where the inception date of the underlying policy governs attachment.

⚙️ When a ceding company purchases excess-of-loss protection on a losses-occurring basis, the treaty responds to any covered event — a fire, a liability occurrence, a catastrophe — that takes place between the treaty's effective and expiration dates. Even if the claim is not reported until years later, the treaty in force at the time of the loss event is the one that pays. This makes losses-occurring treaties straightforward to assign to a specific contract year, simplifying bordereaux reporting and commutation discussions. However, the approach exposes reinsurers to IBNR risk because late-reported claims from a given treaty year can continue to emerge long after the contract has expired, especially in long-tail lines such as general liability or professional liability.

💡 Ceding companies often prefer the losses-occurring basis because it guarantees continuous protection: as long as successive treaties are renewed without gaps, every occurrence date falls within a covered period and there is no risk of an uncovered interval. Reinsurers, for their part, price the latent IBNR exposure into the premium and may negotiate sunset clauses that cut off reporting after a defined period. The choice between losses-occurring, claims-made, and risks-attaching triggers is a significant structural decision in any reinsurance program and can materially affect both the cost of coverage and the pattern of loss development attributed to each contract year.

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