Page 257 - Reinsurance Management IC85

Reinsurance Management

two methods are the "losses occurring" basis
and the "risk attaching" basis.
i. On the 'losses occurring' basis, all losses
occurring within the period of the treaty are
covered, no matter when the original policy
was issued. The fact that the original policy
was issued before the inception date of the
present treaty and while another excess of
loss treaty was in force does not relieve the
present reinsurer of liability. Similarly, at
termination, the reinsurer is not liable for
losses occurring after the treaty ends, although
the original policy may remain in force. He
does, however, remain liable for losses which
occurred during the period of the treaty but
which had not yet been settled - whether or
not the insurer is aware of these claims at
the date of termination.

The merit of this system is its simplicity. Each
treaty year is self contained. There is no
portfolio taken over at inception, no portfolio

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