Category: Reinsurance fundamentals · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-05
The loss occurring basis (LOD — losses occurring during) is a reinsurance attachment basis under which the treaty responds to losses occurring during the treaty period, irrespective of the inception date of the underlying insurance policy. It is the standard basis for catastrophe excess of loss reinsurance.
Category: Reinsurance fundamentals Also known as: losses occurring during, LOD Related concepts: risk attaching basis, catastrophe excess of loss, reinsurance treaty
Under a loss occurring basis the trigger for the reinsurance is the date of loss, not the date of the underlying policy. A 2024 loss occurring XL treaty responds to any loss occurring between 1 January and 31 December 2024, regardless of whether the underlying policy was written in 2023, 2024 or earlier. The treaty effectively protects the cedant’s calendar year experience.
The loss occurring basis is the dominant basis for catastrophe excess of loss and risk excess of loss reinsurance on short-tail business (property, motor, personal accident). It produces a clean calendar year result for the reinsurer and matches the cedant’s exposure to a single peril event during the treaty year.
The Market Reform Contract template provides the standard expression of the LOD basis. Contract certainty disciplines under FCA supervision require that the attachment basis is unambiguous in the slip and wording. Specific carve-outs typically apply for occupational disease, latent injury and other exposures where the date of loss is difficult to define.
The loss occurring basis is most clearly applied to natural peril losses, where the date of loss is the date of the peril event. For long-tail business — particularly occupational disease, asbestos, environmental and certain liability lines — defining the date of loss is more difficult. The contract typically defines the date of loss for these purposes either as the date of injurious exposure, the date of manifestation, or the date of the underlying insurance policy attachment, depending on the wording adopted.
For a cedant the LOD basis is useful for catastrophe protection because it allows the cedant to buy capacity that responds to a single major peril event affecting the entire in-force portfolio, regardless of when the underlying policies were written.
An illustrative example: a UK property insurer’s 2024 catastrophe XL programme is placed on a loss occurring basis. A North Sea windstorm on 12 February 2024 causes losses to the insurer’s policies written in 2023 (still in force) and 2024 (incepting throughout the year). All such losses, having occurred within the treaty period, are covered under the 2024 LOD treaty.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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