Page 258 - Reinsurance Management IC85

The Insurance Times

withdrawn at cancellation, and no checking
when a claim occurs to see when the policy
was issued and what treaty was affected.

ii. The "risk attaching" basis is used to avoid
the hazard of the reinsurer cancelling a
treaty and leaving the insurer without cover
for the duration of the policies. Under this
method, claims under policies issued or
renewed during the treaty year are covered
no matter in which year they may occur.
Thus a claim may involve the previous
treaty or the present one depending on the
date on which the policy was issued. The
reinsurer will be at risk until all policies
covered by the treaty for that year of
account have expired and all losses settled.
Thus, if the business has a long run-off, the
reinsurer has a long run-off. The defects of
this system are the long run-off and the
difficulty of assigning a claim to the proper
excess of loss treaty year.

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