01.08. Other Premium Accounting Issues

  1. Premium Financing vs Accounting
    • some insurer charge to allow premium installments
    • this charge can be considered as additional premium, service charge, or financing charge
    • In U.S., fixed = service charge, % = finance charge
  2. Earning Premium before it's written
    • audit premium: overall audit premium may be estimated, but can't be charged to individual customers until after the audit is complete
    • reinstatement premium: based on loss reserve it's quite predictable, but can't be earned until paid losses reach attachment point
    • can charge those as written premium
    • deferral-matching: EP = WP + beg UEP - end UEP
    • can also book as UEP
  3. Extended Reporting Endorsements
    • claims made only cover claims reported during policy term
    • can allow for extension of time frame for free / additional cost
    • accounting: if extension is for a definite period --> UEP; if for indefinite period --> loss reserve
Card Set
01.08. Other Premium Accounting Issues
Other Premium Accounting Issues