Example: policy attachment in Reinsurance Management

In the following illustration, PolicyCenter has two active reinsurance programs for property. Program 2011 starts on 01/01/2011 and is effective for the whole year. Program 2012 continues the same reinsurance coverage for 2012. A commercial property policy starts on 06/01/2011 and ends one year later.



The numbers in the illustration show the following:

  1. Both programs have three policy attachment treaties:
    • One quota share treaty
    • Two surplus treaties
  2. Both programs have one loss attachment treaty:
    • One net excess of loss treaty
    Note: In this example, the Loss Attachment Basis of the net excess of loss treaty is set to Loss Date Attachment. For net excess of loss treaties, this field can also be set to Policy Attachment.
  3. On the commercial property policy, the policy attachment treaties from Program 2011 attach on the effective date, 06/01/2011. The policy attachment treaties from Program 2011 provide reinsurance coverage for the whole policy term, through 06/01/2012. Although the Program 2011 treaties end on 01/01/2012 in the middle of the policy term, the policy is still protected by the policy attachment treaties in Program 2011.
  4. The NXOL loss attachment treaty from Program 2011 attaches to the policy on the effective date, 06/01/2011. This treaty ends on 01/01/2012, and the NXOL treaty from Program 2012 attaches to the policy on this date.
Note: In the base configuration, a midterm policy change does not change the set of treaties that apply to a risk. There is no change because only the policy period effective date matters for policy attachment treaties. Only the effective date of the program matters for loss attachment treaties. You can configure variations of these two attachment methods.

See also