Hello Acted,
I've come across a solution in one of the past papers which says that the exposure period covered by reinsurance cover on a risk attached basis can be up to 3 years.
Now when I initially saw the question, my immediate thought was that the exposure period should be 3-years, however when I try to work it out logically I confuse myself and can't seem to understand why it's three years.
For example, under a risk-attaching reinsurance programme, let's say that covers the period between January 2019 and January 2020 - this will cover all policies that incept during the period between 1st January 2019 to 1st January 2020. Let's say a policy incepts on the last day of this policy (i.e. 31st December 2019) - then this policy will be on risk for the reinsurer until 31st December 2020.
So from January 2019 to 31st December 2020 the maximum exposure period is 24 months. I know I'm going wrong somewhere but can't figure out where?
EDIT:
Ok, I think I've got it actually ... we're referring to all Risk-Attaching Policies that are written over the period, so in my example above, there could be another Risk-Attaching Policy that is sold on the 31st December 2019, which will cover the period from 31st Dec 2019 to 31st Dec 2020, which could have a policy sold on 31st December 2020 which will be on cover until 31st December 2021.
Apologies for the long thread - and fully appreciate this post has just turned into me putting my thoughts in a forum xD
Many thanks,
Harry
Last edited by a moderator: Mar 9, 2021