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rather than written premium, and the investment income
earned on the assets it holds.

Similarly, policyholder benefits are expenses incurred
by the firm, which must be matched to the revenues
earned on the policies. It is incorrect to count only paid
losses and paid loss adjustments as expenses. The
expenses incurred for policy benefits can be computed
through loss reserve liability account.

Incurred Losses = Paid Losses + Ending Claim Liability
- Beginning Claim Liability

Q2. Explain the concept of incurred loss. How it
is calculated?

Ans. Incurred loss is the measure used to calculate the
insurance company's liability.

Incurred Loss = Paid Loss + Ending Loss Reserve -
Beginning Loss Reserve

Partial payments may be split into payments with and

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