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📝 '''Claims-made basis''' is a policy trigger structure under which an [[Definition:Insurance policy | insurance policy]] responds to a [[Definition:Claim | claim]] only if the claim is first made against the [[Definition:Policyholder | insured]] during the active [[Definition:Policy period | policy period]], regardless of when the underlying wrongful act, error, or event actually occurred. This stands in contrast to the [[Definition:Occurrence-based policy | occurrence basis]], which ties coverage to the date of the loss event itself. Claims-made coverage dominates [[Definition:Professional liability insurance | professional liability]], [[Definition:Directors and officers liability insurance (D&O) | directors and officers]], [[Definition:Errors and omissions insurance (E&O) | errors and omissions]], and [[Definition:Cyber insurance | cyber]] lines across virtually every major insurance market — from the United States and the [[Definition:Lloyd's | Lloyd's]] market to key Asia-Pacific centers like Singapore, Hong Kong, and Japan.

🔧 The mechanics of a claims-made policy hinge on several interlocking features. A [[Definition:Retroactive date | retroactive date]] defines the earliest point in time from which wrongful acts will be covered; any act predating this cutoff falls outside the policy's scope. Many claims-made policies also include a [[Definition:Prior knowledge exclusion | prior knowledge]] or "known circumstances" provision, which bars coverage for matters the insured was aware of before inception. When the policy expires or is not renewed, the insured faces a potential gap — future claims arising from past acts would find no responding policy unless an [[Definition:Extended reporting period | extended reporting period]] (often called a "tail") is purchased. Some jurisdictions, particularly in the European Union under [[Definition:Solvency II | Solvency II]]-era conduct rules, impose additional disclosure requirements so that policyholders understand these limitations at the point of sale. [[Definition:Underwriting | Underwriters]] favor the claims-made structure because it provides clearer loss attribution to individual policy periods, simplifying [[Definition:Reserve | reserving]] and [[Definition:Pricing | pricing]] compared to the open-ended exposure window of occurrence-based covers.

💡 The claims-made basis carries strategic implications for every participant in the insurance value chain. For policyholders, it demands vigilance: failing to report a known or potential claim during the correct policy year can permanently extinguish coverage. [[Definition:Insurance broker | Brokers]] must manage renewal transitions carefully, ensuring retroactive dates carry forward and that no inadvertent gap arises between expiring and incepting policies. [[Definition:Actuary | Actuaries]] benefit from claims-made portfolios because the development tails are generally shorter and more predictable than those of occurrence books, leading to more stable [[Definition:Loss reserve | reserve]] estimates. For [[Definition:Reinsurance | reinsurers]], claims-made underlying business simplifies treaty structuring since losses can be allocated to policy periods with greater certainty. The growing adoption of claims-made forms in emerging risk areas — most notably [[Definition:Cyber insurance | cyber]] — reflects the industry's preference for trigger clarity when loss patterns are still evolving and historical data remains sparse.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Occurrence-based policy]]
* [[Definition:Retroactive date]]
* [[Definition:Extended reporting period]]
* [[Definition:Claims-made and reported policy]]
* [[Definition:Claims trigger]]
* [[Definition:Prior knowledge exclusion]]
{{Div col end}}

Definition:Claims-made basis - Revision history

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