Risk attaching basis

Textbook case: a fleet policy written on December 15, 2026 for twelve months falls under the 2026 treaty for a loss on September 3, 2027. By then the 2027 treaty has already been running for nine months. A risk attaching treaty covers every policy issued or renewed during its period. It follows each one to its own expiry, even after the treaty itself has ended. A 2026 treaty therefore protects a policy written in November 2026 through to November 2027. It is the normal basis for proportional treaties, quota share and surplus, because it aligns the cession of premium with the cession of risk. The reinsurer receives a fraction of the policy's premium and carries the same fraction of its losses, for the policy's whole term. A losses occurring basis would break that coherence by charging one reinsurer with losses whose premium another collected. The trade-off is spread. A risk attaching treaty stays exposed for up to twenty-four months after inception. A single year becomes harder to read, and the portfolio has to be tracked by underwriting year rather than by accounting year.