Page 37 - Insurance Times July 2022

London, Dubai and Malaysia Branch : Reserve for unexpired appropriate after adjusting for unearned premium
risks is provided at local practice. Adjustment for excess or (unexpired risk).
short provision in Unexpired Risk Reserves as per IRDAI
requirement, is accounted at head office. Reinsurance premium ceded on unearned premium is
carried forward to the period of risk and is set off against
Premium Deficiency Reserve (PDR) ; Where applicable related unearned premium.
premium deficiency is worked out separately for each
segmental revenue level basis, viz. fire, marine and Reserve for unexpired risks is calculated on the basis of 1/
miscellaneous. As per IRDAI Circular No. IRDAI/Reg/7/119/ 365 method in all segments subject to a minimum of 100%
2016 dated 7 April 2016, Premium Deficiency Reserve is in case of marine hull and based on net premium written
calculated by Non-life Appointed Actuary. during the year which ever is higher as per IRDA Circular
No. IRDAI/F&A/CIR/CPM/056/03/2016 dated 4th April, 2016
Go-Digit General Insurance Ltd.
Premium deferred for recognition of income in the future Premium deficiency is recognised for the company as whole
on an annual basis. Premium deficiency is recognised if the
period related long term motor insurance policies are
sum of expected net claim costs related expenses and
included in unallocated premium in the Balance Sheet.
maintenance costs exceeds the related reserve for
unexpired risks. Claims costs are calculated and duly
Unearned premium on reinsurance ceded is carried forward
certified by the actuary.
to the subsequent accounting period and is set off against
related unearned premium income.
ICICI Lombard
Reserve for un-expired risks : Premium earned including reinstatement premium and
Reserve for unexpired risk represent that part of the net reinsurance accepted is recognised as income over the
premium written which is attributable to and allocated to period of risk or the policy period based on 1/365 method
the succeeding accounting periods. In accordance with whichever is appropriate on gross basis, other than
IRDAI circular No. IRDAI/F&A/CIR/CPM/056/03/2016 dated installment premiums received for group health policies
4th April, 2016 and Master Circular on Preparation of where in the installment premiums are recognised over the
Financial Statements and Auditors Report of General balance policy period.
Insurance Business and corrigendum issued thereon, reserve
for unexpired risks is calculated based on 1/365 method in Premium allocated to subsequent period is included in
all segments subject to minimum of 100% of net premium premium received in advance.
written with respect to marine hull policies written during
the year and are unexpired as on balance sheet date. Reserve for unexpired risks is created net of reinsurance
ceded and represents premium written that is attributable
Premium deficiency is recognised if the sum of expected to and is to be allocated to succeeding accounting periods
net claim costs related expenses and maintenance costs For fire, marine cargo and miscellaneous business it is
exceeds the related reserve for unexpired risks. Premium is calculated on daily pro-rata basis except in case of marine
assessed at each Balance Sheet date and is recognised at hull business it is computed at 100% of net premium written
segment revenue account(s) level. The expected claims on all unexpired policies on the balance sheet date.
including related expenses and maintenance for premium
deficiency reserve computation calculated and duly Premium deficiency is recognised at segmental revenue
certified by the appointed actuary. account level when the sum of expected net claim costs
related expenses and maintenance costs exceeds the related
Terrorism Pool : The entire amount of reinsurance accepted reserve for unexpired risks. The Premium Deficiency is
for the current year on this account, net of claims and calculated and duly certified by the Appointed/ Panel
expenses up to the above date has been carried forward to Actuary.
subsequent accounting period as unexpired risk reserve for
subsequent risks if any to be borne by the company. IFFCO Tokio
Premium and cession thereof are recognized over the
HDFC Ergo contract period or the period of the risk in respective
Premium including reinsurance accepted is recognised as revenue account following 1/365 method. Reserve for
income over the contract period or risk period as unexpired risk representing premium attributable to the

The Insurance Times, July 2022 37