1.          The rule

C1        A contract of reinsurance referring to “risks attaching” covers financial obligations of the reinsured arising as a consequence of the materialization of a peril insured against under a reinsured relationship (Comments 6 et seq. to Article 4.2) that is formed or is renewed during the reinsurance period (O’Neill & Arnold-Dwyer 5-090, Clyde & Co 1.109), irrespective of the date on which coverage was triggered under the reinsured relationship, of the date on which the insured event occurred or of the date on which the reinsured’s coverage obligation under the reinsured relationship emerged. In the context of this rule, renewal refers to the formation of renewed coverage, not to the point in time at which the parties to a reinsured relationship agreed to renew coverage.

C2        Reinsurance coverage based on “risks attaching” provides for considerable clarity. The only decisive factor is the formation date of the relevant reinsured relationship. Under a contract of reinsurance on a “risks attaching” basis, the reinsurer may be confronted with claims made by the reinsured years after the reinsurance period has ended. In order to limit their future exposure, reinsurers may reinsure policies with a definite expiration date only (cf. Pohl & Iranya 37) or provide for a cutoff in the contracts of reinsurance.