Claims-made policies cover claims reported while the policy is in force, as long as the claim results from services provided on or after the prior acts date (retroactive date).
Occurrence policies cover claims resulting from services performed while the policy is/was in force, regardless of when the claim is reported.
In the initial years of a claims-made policy, premiums are lower. The first-year premium is the lowest, as it covers claims occurring and reported within that year. From the second year onwards, premiums increase, as the policy responds to claims from previous years that are reported later. This premium escalation continues until the fifth year. After the fifth year, premiums remain stable at a mature level.