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Short duration ins contract
- Most P/C contracts, term life ins pol
- Can cancel pol, revice P, adjust provisions at renewal
- Premiums are usually earned evenly over pol period
- Liability for unpaid clms and LAE accrued when event occur
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Long duration ins contract
- Most life insurance contracts, annuity contracts
- Generally not subject to changes in provisions
- Premium generally level troughout
- Liabilities are accrued over current and expected renewal periods
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Premium deficiency
- Recognized is sum of expected clm costs and LAE, expected dividends to PH, unarmortized acquisition costs, and maintenance costs exceeds related unearned prem
- Charge any unamortized acquisition cost
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