-9- Petitioner’s Liability for Policy Claims Since 1982, petitioner has written professional liability insurance policies on a claims-made basis. Under such policies, petitioner is liable only for claims that are made and reported during the effective dates of a policy. For example, if an insured was covered by a policy effective January 1 through December 31, 1993, the insured would have professional liability protection for claims made and reported during that policy year. If the insured terminated insurance coverage effective January 1, 1994, any claims made thereafter would not be covered unless the insured purchased an extended reporting period endorsement (ERE).7 Petitioner's Loss Reserves Process Petitioner annually determines its loss and loss adjustment expense reserves (loss reserves) for purposes of reporting such amounts on the NAIC annual statement, particularly schedule P thereto. Petitioner’s total unpaid loss reserve comprises two components: An incurred loss case reserve (case reserve) and a 7 From 1982 until 1986, petitioner offered its insureds the opportunity to purchase ERE’s with an unlimited tail period. In order to receive this type of coverage, the insured was required to purchase a policy endorsement that provided for extended coverage for claims that were made and reported after the claims- made policy period had expired. Since 1986, petitioner has offered to its insureds ERE’s, with up to five annual renewals, that provide only for a 1-year extended reporting period.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011