Page 39 - Insurance Times July 2022

revenue account level when the sum of expected net claim Premium Deficiency is recognised if the sum of expected net
costs and related expenses and maintenance costs (relating claim costs and related expenses and maintenance costs
to claims handling) exceed reserve for unexpired risks. In (relating to claims handling) exceed reserve for unexpired
computing the overall deficiency at miscellaneous revenue risks. The expected claim costs are calculated and duly
account level premium deficiency arising out of reinsurance certified by appointed actuary.
acceptances from declined risk pool is not considered as per
regulatory guidelines. The premium deficiency is calculated In accordance with master Circular and corrigendum on
and duly certified by appointed actuary. master circular on preparation of financial statements issued
by IRDAI vide Circular No IRDA/F&A/CIR/FA/231/10/2012
Terrorism Pool : The Company has created liability to the dated 5th October 2012 and IRDA/F&A/CIR/FA/126/07/2013,
extent of 100% of premium (net of claims and expenses) dated 3rd July 2013, respectively.
retroceded to the company during the year through reserve
for unexpired risks. New India Assurance
A reserve for unearned premium for each segment,
National Insurance representing that part of the recognised premium
Unearned premium reserve is created on the amount attributable to succeeding accounting periods calculated on
representing that part of the net premium written which is time apportionment basis is created. This forms part of the
attributable to allocated to the succeeding accounting unexpired risk reserves.
periods including on the yearly premium recognised on long
term motor policies on new cars and new two wheelers sold Unearned premium reserve is computed in accordance with
on or after 1st of September, 2018 and also on short term guidelines issued by IRDAI as under.
policies, at 50% of net premium except marine hull business, a) Marine hull 100% of net written premium during
where it is made at 100% of net premium. preceeding 12 months.
b) in respect of other segments 1/365 method on the
However, no unearned premium reserve is created in case
unexpired period of respective policies.
of Pradhan Mantri Fasal Bima Yojana - Kharif Business, as
the entire risk period falls within the financial year.
Premium deficiency is calculated where the sum of expected
claims costs, related expenses and maintenance costs
Premium deficiency is recognised and disclosed where the
exceed the related unearned premium. The premium
sum of expected claims costs, related expenses and
deficiency is recognised as per IRDAI guidelines and forms
maintenance costs exceed the related unearned premium
part of unexpired risk reserve.
on an annual basis as certified by the Actuary.
Oriental Insurance
Navi General Insurance Reserve for unexpired risks is based on a percentage there
Premium including reinsurance accepted is recorded over of, being 50% in case of fire, marine cargo and miscellaneous
the contract period or the period of risk, as appropriate, business and 100% in case of marine hull business. It
after adjusting for unearned premium (unexpired risk). represents the net premium attributable to the successive
financial years. Unexpired risks for kharif crops is taken as
Long term Motor Own Damage Premium is recorded on a nil as it is short term expiring within the accounting period.
year to year basis in proportion to the movement in Insured's The premium is booked in compliance of compendium to
Declared Value (IDV) and Third-Party Premium is recorded master circular ref. no. IRDA-F&A-CIR-FA-126-07-2013 dated
equally over the duration of the term of Insurance. The 3rd July, 2013.
remaining premium in Long Term Motor business is taken
to Advance Premium Account. Premium deficiency is calculated where the sum of expected
claims costs, related expenses and maintenance costs
Reserve for unexpired risk represents that part of the net exceed the related unearned premium. The premium
premium written which is attributable to and allocable to deficiency is recognised as per IRDAI guidelines and forms
the succeeding accounting period(s), is calculated net of re- part of unexpired risk reserve.
insurance cession, on the basis of the following method:
50% for Fire / Marine Cargo / Miscellaneous business; and Raheja QBE
Reinsurance premium 100% for Marine hull business of the Revenue Recognition: Premium Income: Premium (net of
net premium written over the preceding twelve months. GST), on direct business and reinsurance accepted, is

The Insurance Times, July 2022 39