Claims-Made Premium & Tail Calculator
Compare a quote-specific claims-made premium path, including a possible tail at exit, with a comparable occurrence quote. The schedule separates scheduled step increases from your assumption about changing annual rates.
Claims-made total including tail$66,685.13
- Cumulative claims-made premiums before tail
- $42,375.00
- Estimated tail premium
- $24,310.13
- Cumulative occurrence premiums
- $71,833.21
- Claims-made cost difference
- -$5,148.08
- Break-even tail factor
- 242.35%
- Lower projected-cost option
- Claims-made has the lower projected cost
Year-by-year premium schedule
| Policy year | Step factor | Projected mature rate | Claims-made premium | Occurrence premium | Claims-made cumulative | Occurrence cumulative |
|---|---|---|---|---|---|---|
| 1 | 30% | $10,000.00 | $3,000.00 | $13,000.00 | $3,000.00 | $13,000.00 |
| 2 | 60% | $10,500.00 | $6,300.00 | $13,650.00 | $9,300.00 | $26,650.00 |
| 3 | 90% | $11,025.00 | $9,922.50 | $14,332.50 | $19,222.50 | $40,982.50 |
| 4 | 95% | $11,576.25 | $10,997.44 | $15,049.13 | $30,219.94 | $56,031.63 |
| 5 | 100% | $12,155.06 | $12,155.06 | $15,801.58 | $42,375.00 | $71,833.21 |
Projected rate changes compound each year and are separate from the scheduled claims-made step factors.
Use quotes with materially similar insureds, limits, exposures, and major coverage terms.
How to use this calculator
- Enter the current mature claims-made and comparable occurrence premiums from your quotes.
- Set the policy year when you expect to leave the claims-made coverage.
- Replace the illustrative step factors and tail factor with the carrier figures for your coverage.
- Enter separate annual rate-change assumptions, then choose the rate basis stated for the tail.
- Read the schedule and break-even factor alongside the actual policy terms and broker advice.
How the premium comparison is calculated
Claims-made premiums often begin below the mature rate because the policy initially responds to a shorter history of covered work. The scheduled step factor changes that share of the mature premium. It is not the same thing as a renewal rate change: a carrier can raise or lower its underlying rates while the policy is also moving to its next step.
For policy year n, the calculator projects the mature claims-made rate as M_n = M × (1 + g)^(n − 1). It then applies the step factor s_n: C_n = M_n × s_n. The occurrence projection is O_n = O × (1 + h)^(n − 1). Here, M and O are today’s quoted annual premiums, while g and h are the annual rate-change assumptions expressed as decimals.
The claims-made amount before tail is C = ΣC_n for the years you select. The tail is T = B × q, where B is the selected exit-year rate basis and q is the entered tail factor. The tool compares C + T with A = ΣO_n, the occurrence total. Its break-even tail factor is q_BE = (A − C) ÷ B.
What to check in the quote
The step schedule, tail factor, and tail rate basis move the result most. Enter the actual factor table rather than assuming that every carrier matures in five years or uses a 200% tail. A higher early step can be legitimate, but it is worth confirming because it can change the budget sharply. The selected exit year matters too: a tail can be priced from a mature claims-made rate or an occurrence rate, depending on the filing or quote.
If the displayed break-even tail factor is below zero, claims-made already costs more before a tail is added. If its tail basis is zero, the tool cannot calculate a break-even factor. A zero occurrence quote is treated as missing, not as evidence that occurrence insurance is free.
What this comparison does not decide
This is a premium budget, not a coverage analysis. It does not model taxes, fees, dividends, discounts, changing limits, changing exposures, claim history, schedule rating, policy language, or eligibility for a free tail. It also cannot determine whether a tail is needed: prior-acts or nose coverage with a replacement policy may address earlier work, but the insurer or broker must confirm that result. Compare only quotes with materially alike insureds, limits, exposures, and key terms.
Worked example
Suppose the mature claims-made premium is $10,000, the step factors are 30%, 60%, 90%, 95%, and 100%, and rates do not change. Over five years, the claims-made premiums are $3,000, $6,000, $9,000, $9,500, and $10,000, for $37,500 before tail. With a 200% tail on the fifth-year mature rate, the tail is $20,000 and the claims-made total is $57,500.
If the comparable occurrence premium is $13,000 with no annual trend, its five-year total is $65,000. Claims-made is therefore $7,500 lower. The break-even tail factor is ($65,000 − $37,500) ÷ $10,000 = 275%; a tail above 275% would make occurrence less expensive on these assumptions.
Common questions
Why do claims-made premiums increase each year?
Each renewal can respond to claims reported during that policy period arising from a longer span of prior work. That expanding exposure is commonly reflected in a scheduled step process until the policy reaches its mature rate. Separate carrier rate changes can increase or decrease the price at the same time.
What is a claims-made step factor?
A step factor is the percentage of the mature annual claims-made premium charged for a particular policy year. For example, a 60% second-year factor applied to a $10,000 mature rate produces a $6,000 premium before any separate rate trend. Carrier schedules vary, so use the quote or rate manual that applies to your policy.
How is tail coverage priced?
Tail, or extended reporting period, coverage is often quoted as a factor times a stated annual rate basis. The basis may be a mature claims-made rate or an occurrence rate, and the factor can depend on tenure and eligibility. This calculator lets you select the stated basis instead of assuming one.
When does claims-made insurance become mature?
Maturity is the point at which the carrier’s scheduled claims-made step increases stop, not a universal number of years. Many illustrations use five years, while some carrier schedules extend longer. Check the applicable policy or rate manual rather than relying on a general rule.
Can nose or prior-acts coverage replace a tail?
Potentially, but only if the replacement policy provides the needed prior-acts protection and its terms match the gap you are trying to cover. A new policy, its retroactive date, exclusions, and carrier rules control the answer. Confirm the arrangement with the carrier or broker before cancelling coverage.