Assuming you are talking about settlement length, then I would say (very) generally:
Property damage: short tail
Liability: long tail
Financial loss: medium tail
Fixed benefit: short tail
The main drivers of length include how easy/quick it is to identify:
whether a claim has actually occurred
what the cost of the claim is
when the loss occurred
who is liable for the loss
Property losses are easy to identify (often visual evidence), and there is little doubt about the the claim value, as it is for a physical item. The proximate cause (i.e. the event that triggered the loss) is usually easy to identify, as is the person/entity/hazard responsible for the loss (which could result in disputes as to whether the peril is covered under the insurance policy, extending the tail).
Liability claims are often easy to identify (illness, death, damage to property, incorrect advice/medical care, etc), however they may not be immediately obvious (eg asbestosis took many years to develop into an apparent illness, while poor fund management may be discovered only when there is an economic downturn). The cost of the claim can be very difficult to determine (how much should someone be compensated due to death or illness?), exacerbated by the fact that the causes of cost (such as healthcare) can be ongoing, and therefore cannot be accurately calculated. It also may take a long time to determine the liable party, usually due to court battles that last a long time, sometimes with multiple culpable parties.
Financial losses are usually easy to identify, as there will be an obvious reduction in revenues/earnings. The date of loss is therefore also easy to identify. However for claims such as business interruption, it needs to be determined how long the business is unable to generate revenues due to the loss, which can only be determined when the company has returned to generating normal revenues (up to the time limit in the contract). However the daily/weekly amount due is usually in the contract, so there is little doubt about it. My understanding is there isn't a liable party, as losses arising from the actions of another party may be covered under that party's liability policy.
Fixed benefits have a very short tail, as they are usually paid if a particular event occurs. This event is usually easy to identify (loss of limb, death, a prize being won, etc), as is the timing. The amount due is also defined in the contract, and there is no need to determine the liable party, other than for disputes about contract coverage.
The tail for the classes falling under these types of claims can be assessed using similar reasoning.
Note that the basis of coverage (losses occurring during, risks attaching during, claims made during) can also significantly affect the tail.
Last edited by a moderator: Mar 25, 2015
