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📅 '''Risks attaching''' is a basis of [[Definition:Reinsurance | reinsurance]] contract coverage under which the reinsurer assumes liability for all [[Definition:Insurance policy | underlying policies]] whose inception date (or renewal date) falls within the treaty period, regardless of when [[Definition:Loss | losses]] under those policies actually occur. This means a [[Definition:Reinsurance | reinsurance]] treaty written on a risks-attaching basis covers the entire lifetime of qualifying original policies that begin during the treaty year, even if claims arising from those policies are reported or settled long after the treaty has expired.

⚙️ Under a risks-attaching treaty, the critical trigger is the original policy's inception or attachment date — not the date of the loss event. If a [[Definition:Cedent | cedent's]] [[Definition:Proportional reinsurance | proportional treaty]] runs on a risks-attaching basis from January 1 to December 31, 2025, every underlying policy incepting in that window is covered for its full term (typically twelve months, sometimes longer), meaning the treaty's exposure can extend well into 2026 or beyond. This contrasts sharply with the [[Definition:Losses occurring | losses-occurring]] basis, where coverage depends on the date of the loss event itself falling within the treaty period, irrespective of when the underlying policy incepted. The risks-attaching approach is most commonly used in [[Definition:Proportional reinsurance | proportional]] ([[Definition:Quota share | quota-share]] and [[Definition:Surplus treaty | surplus]]) treaties, where the reinsurer shares in the premium and [[Definition:Loss | loss]] of each ceded policy from inception to expiry. [[Definition:Actuarial analysis | Actuaries]] and [[Definition:Reinsurance broker | brokers]] must carefully account for the "pipeline" effect: because policies incepting late in the treaty year will have most of their exposure and loss development in the subsequent calendar year, the treaty's [[Definition:Earned premium | premium earning]] and [[Definition:Loss development | loss emergence]] patterns lag behind those of a losses-occurring treaty.

📌 This distinction has meaningful consequences for both parties' financials and for treaty administration. The cedent enjoys certainty that all policies bound during the treaty period are fully reinsured for their entire duration, which simplifies [[Definition:Cession | cession]] processes and avoids coverage gaps at treaty renewal. The [[Definition:Reinsurer | reinsurer]], however, must recognize that its exposure to a risks-attaching treaty does not terminate neatly at year-end — loss development can trail for years, particularly in long-tail [[Definition:Casualty insurance | casualty]] classes. This extended tail affects [[Definition:Loss reserve | reserving]], [[Definition:Profit commission | profit-commission]] calculations, and the timing of [[Definition:Reinsurance commutation | commutation]] discussions. In the [[Definition:Lloyd's of London | Lloyd's]] market, risks-attaching treaties interact with the annual [[Definition:Year of account | year-of-account]] accounting system, influencing how and when syndicates close years and calculate [[Definition:Reinsurance to close (RITC) | reinsurance to close]]. Understanding the distinction between risks-attaching and [[Definition:Losses occurring | losses-occurring]] coverage is fundamental for anyone involved in treaty structuring, pricing, or financial reporting.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Losses occurring]]
* [[Definition:Proportional reinsurance]]
* [[Definition:Quota share]]
* [[Definition:Surplus treaty]]
* [[Definition:Reinsurance contract]]
* [[Definition:Year of account]]
{{Div col end}}

Definition:Risks attaching - Revision history

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