In a stop-loss contract basis notation, what does 15/12 indicate?

In a stop-loss contract basis notation, what does 15/12 indicate?

• A. 12 months incurred, 15 months paid.
• B. 15 months paid, 12 months incurred.
• C. 15 months incurred, 12 months paid.
• D. 12 months paid, 15 months incurred.

Answer: (C)

In this notation, losses are measured using two time windows: when a loss is considered incurred and when it is paid. The first number refers to the incurred window, and the second to the paid window. Therefore, 15/12 means losses can be incurred for up to 15 months, but payments for those losses will be made within 12 months. This shows the incurred window is longer than the paid window. The reason this is the best answer is that the order always puts incurred first and paid second, so the interpretation is that 15 months are incurred and 12 months are paid.

In this notation, losses are measured using two time windows: when a loss is considered incurred and when it is paid. The first number refers to the incurred window, and the second to the paid window. Therefore, 15/12 means losses can be incurred for up to 15 months, but payments for those losses will be made within 12 months. This shows the incurred window is longer than the paid window. The reason this is the best answer is that the order always puts incurred first and paid second, so the interpretation is that 15 months are incurred and 12 months are paid.