Page 34 - Insurance Times July 2022

those who have calculated on gross basis, some have premium withdrawal" and "Portfolio premium entry".
stated that the unearned premium of ceded business is Such clauses in fact with unexpired risk reserves relating
adjusted against unearned premium of gross business. to re-insurance transactions. The impact of such clauses
And many insurers are silent about such adjustment. and transactions flowing there from have to be
Most of the insurers are silent on unearned premium synchronized with the premium reserving in general, so
of accepted business. Normal meaning of net premium that duplication or gaps if any are taken care of.
is gross minus ceded plus accepted. Are the insurers
13. In case of long term policies the reserving process has
who are silent about unearned premium of they
to incorporate discounting into its calculations.
complying with the minimum requirements.
11. As far as the certification of premium deficiency Conclusion
reserves, the policies reflect differing practices of the
There has always been a trade off between perfection and
insurers. While some insurers get only 'expected claims
avoiding complexity. The 21st century developments in
cost' component of deficiency to be certified by the
information technology and data management have made
Appointed Actuary, others get all components of
perfection possible without the trade off. Pragmatism
deficiency reserves (Like expected claims costs Expenses,
endowed with flexibility is essential for good governance,
maintenance costs corresponding unearned premium)
but always in an orderly framework and under watchful eyes.
so certified.
Unexpired risk reserves of Nonlife insurers is one of the areas
12. Reinsurance treaties do have clauses called 'Portfolio of high stakes for all stakeholders.

Annexure A

Data on Premium and Unexpired Risk Reserves of General (Non-life) Insurers in India : Annual
Reports 2019-20

Company Gross Net URR as
Direct Premium URR Deficiency a % of Net
Premium Premium
Rupees in Crs
ACKO General Insurance Limited: 373.07 189.59 75.05 0.00 40
Aditya Birla Health Insurance Co. Ltd. 872.04 630.00 344.09 0.00 55
Bajaj Allianz General Insurance Co. Ltd. 12779.77 8016.00 4185.00 0.00 52
Chola MS General Insurance Co. Ltd. 4398.30 3409.19 2205.82 0.00 65
Edelweis General Insurance Co. Ltd. 158.6 131.77 84.15 3.98 64
Future Generali India Insurance Co. Ltd. 3417.49 2163.52 1135.24 0.00 52
GIC Re 51030.13 46655.41 15443.00 2470.98 33
Go Digit General Insurance Limited 1767.86 1560.62 842.65 0.00 54
HDFC Ergo General Insurance Co. Ltd. 9629.59 4866.67 4226.66 0.00 87
ICICI Lombard General Insurance Co. Ltd. 13312.84 9640.69 5838.16 0.00 61
IFFCO Tokio General Insurance Co. Ltd. 7961.04 4741.24 2149.44 0.00 45
KOTAK MAHINDRA General Insurance Co. Ltd. 433.39 377.14 250.21 0.00 66
Liberty General Insurance Limited 1531.37 1338.93 739.80 0.00 55
Magma HDI General Insurance Co. Ltd. 1224.77 790.18 429.35 1.70 54
National Insurance Co. Ltd. 15312.88 9421.71 4567.44 0.00 48
Navi General Insurance Limited 157.99 116.08 65.28 0.00 56

34 The Insurance Times, July 2022