Reporting Year vs. Accident Year

What do the terms reporting year and accident year mean when we discuss types of insurance, like medical professional liability (MPL)? In general, these refer to the grouping or organization of business data (or earnings and losses) for a certain period of time for the purposes of comparison and analysis. Businesses may choose a year, a quarter, or any other established timeframe that gives them the best representation of their financial picture, allowing them to assess company profitability and performance. The terms “reporting year” and “accident year”are also relevant in two types of MPL policies: claims-made and occurrence.

A reporting year is a 12-month period that includes the report date, or the day on which an alleged incident preceding a claim, incident report, or lawsuit was reported to an insurance company, regardless of when the incident occurred.

In claims-made coverage, a provider is covered against any claims reported within the policy active dates (on or after the retroactive date—the first day of coverage—and before the expiration date). Accounting for a reporting year compares losses reported in that 12-month period against premiums earned, to determine profit.

An accident year is any 12-month period during which incidents and losses occurred and insurance policy premiums were earned, regardless of when those losses were reported.

An occurrence policy covers an insured for incidents that occur within the policy active dates. Accounting for accident year July 2023 to June 2024, for example, would compare the losses that occurred within these dates to the premiums earned.

For more on reporting and accident years, visit ProAssurance’s Knowledge Center: https://proassurance.com/knowledge-center/reporting-year-vs.-accident-year