Jaspreet Singh asked 5 years ago
- sir , what is the meaning of unexpired risk reserve? can u give 1 example?
- Sir, incase an insurer or reinsurer, as the case may be, fails to submit the financial plans to the authority under section 64 VA within the prescribed period(6months), then what shall be the consequences of such default?
1 Answers
Ravi Staff answered 5 years ago
- Insurance company issued policy for sum assured 100 crores and took premium of 1.08 crore as premium on 1st Jan 2019 cover for one year. Insurance company books full 1.08 crore as premium income on 1st Jan 19 i.e FY 18-19. But now part of the policy falls in next year, there are chances of claim in next year so insurance company makes “Reserve for Unexpired Risk” on outstanding policies. Right now there are 2 options to maintain these reserves first percentage method 50% of net premium for fire, marine, misc & 100% of marine hull or 1/365 method where in proportionate premium will be transferred to next year.
- If insurance company doesn’t follow solvency related section & regulations, it will deemed to be insolvent and IRDA can move to court and file for liquidation & winding up.