9-Feb-04 (Created: 9-Feb-04) | More in 'Health'


Typically people are covered for insurance for a year at a time. This period of coverage can be said to be the coverage window. Expenses or claims incurred during this period are payable even outside of the coverage window. Such a situation where the payments are made outside of the coverage window is called "run out".

This idea of "runout" has implications. The leading implication is that even though the coverage of certain individuals has terminated, the insurance company (sometimes called the "carrier") needs to plan for the amounts that needs to be set aside for the claims during the runout period.

As I said "runout" and "runout period" are concepts. Whether as specific well defined period is defined or not, I am not sure. For example if I say that the "runout' is 3 months, does the Insurance Company not obligated for any claims outside of this window? I don't believe so. But the 3 month window might be useful estimation purposes. If at all there is such an absolute time window after which no claims will be paid needs to be investigated.

The second implication is, as I have brought up, during the estimation phase for calculating renewal amounts for the insureds. In this case to evaluate how much a member had spent, typically a 1 year worth of claims are taken into account. In addition a 3 months are used to take into account any fulfilled obligations but not paid in the 12 month period.