Definition:Losses occurring during
📅 Losses occurring during is a reinsurance contract trigger basis under which the reinsurer responds to losses arising from events that occur within the defined contract period, regardless of when the underlying original policy was written or when the claim is ultimately reported. Often abbreviated as LOD, this trigger mechanism contrasts with alternatives such as risks attaching and claims made bases, and the choice between them has significant implications for how coverage is activated, how premiums are calculated, and how reserves are established.
⚙️ Under a losses-occurring-during treaty, the reinsurer covers any loss event whose date of occurrence falls within the treaty period — say, January 1 to December 31 of a given year — even if the original policy that generated the loss was bound before the treaty's inception. This means the reinsurer has exposure to the entire in-force portfolio of the ceding company as of each moment during the contract term, not just to policies incepting during that term. The practical effect is smoother matching between the reinsurance protection and the cedent's aggregate loss exposure in any given calendar year. Pricing an LOD treaty requires the reinsurer to assess the cedent's total earned exposure base during the contract period, whereas a risks-attaching treaty focuses only on the exposure generated by policies bound within the period. Regulatory and accounting frameworks treat the two bases differently: under IFRS 17, for instance, the boundary of the reinsurance contract and the pattern of risk release vary depending on whether the trigger is occurrence-based or risks-attaching, affecting how the contractual service margin is recognized over time.
💡 Choosing between a losses-occurring and a risks-attaching basis is one of the most consequential structural decisions in a reinsurance programme. LOD treaties are favored by cedents seeking immediate protection for their entire portfolio from the moment the treaty begins — there is no gap caused by policies already in force that would fall outside a risks-attaching trigger. This makes the LOD basis particularly common for excess-of-loss covers and catastrophe reinsurance, where the timing of a loss event is the natural trigger. However, the LOD basis introduces complexity around claims that are reported years after the event — a phenomenon especially pronounced in long-tail classes such as liability and asbestos and environmental lines. To manage this, treaties typically include a sunset clause or reporting deadline that limits how long after the contract period a loss can be notified to the reinsurer. Across major reinsurance hubs — from the London market and Continental European treaty centres to Singapore and Bermuda — the LOD basis remains the dominant structure for non-proportional covers.
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