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

⚙️ When a [[Definition:Cedent | ceding company]] purchases [[Definition:Excess of loss reinsurance | excess-of-loss]] protection on a losses-occurring basis, the treaty responds to any covered event — a fire, a liability [[Definition:Occurrence | occurrence]], a [[Definition:Catastrophe | 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 [[Definition:Bordereaux | bordereaux]] reporting and [[Definition:Commutation | commutation]] discussions. However, the approach exposes reinsurers to [[Definition:Incurred but not reported (IBNR) | IBNR]] risk because late-reported claims from a given treaty year can continue to emerge long after the contract has expired, especially in [[Definition:Long-tail liability | long-tail]] lines such as [[Definition:General liability insurance | general liability]] or [[Definition:Professional liability insurance | 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 [[Definition:Incurred but not reported (IBNR) | IBNR]] exposure into the [[Definition:Reinsurance premium | premium]] and may negotiate [[Definition:Sunset clause | sunset clauses]] that cut off reporting after a defined period. The choice between losses-occurring, [[Definition:Claims-made basis | claims-made]], and [[Definition:Risks-attaching basis | risks-attaching]] triggers is a significant structural decision in any [[Definition:Reinsurance program | reinsurance program]] and can materially affect both the cost of coverage and the pattern of [[Definition:Loss development | loss development]] attributed to each contract year.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Claims-made basis]]
* [[Definition:Risks-attaching basis]]
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Incurred but not reported (IBNR)]]
* [[Definition:Reinsurance treaty]]
* [[Definition:Sunset clause]]
{{Div col end}}

Definition:Losses-occurring basis - Revision history

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