What is typically required from organizations regarding claims under a claims-made policy?

A claims-made policy provides coverage for claims that are made during the policy period, regardless of when the incident that caused the claim occurred. When an organization holds a claims-made policy, it is typically required to reserve for all claims that have been incurred but not reported (IBNR) prior to the cancellation of the policy. This is where tail coverage comes into play; tail coverage extends the reporting period for claims after a claims-made policy ends.

By reserving for these claims in tail coverage, organizations ensure they are financially prepared to handle any claims that arise after the policy has been canceled, as long as the incidents occurred during the coverage period. This is crucial for maintaining proper risk management and financial stability, as failing to reserve for these claims can lead to unanticipated liabilities and potential losses.

In contrast, the other options do not accurately reflect the requirements or characteristics of claims-made policies.