Page 40 - Insurance Times July 2022

recognized as income based on 1/365th Method of contract Royal Sundaram
period or risk period whichever is appropriate.
Premium is recognised as income over the contract period
or period of risk as appropriate and for installment cases it
Reserve for unexpired risk represents that part of net
is recognised on installment due dates after adjusting for
premium (net of proportional reinsurance ceded) which is
unearned premium and premium deficiency if any,
attributable to, and set aside for subsequent risks to be
borne by the Company under contractual obligations on a
Premium deficiency is recognised whenever expected claims
contract period basis or risk period basis, whichever is cost related expenses and maintenance cost exceed related
appropriate. The reserves are computed as 100% in case of
reserve for unexpired risk in fire, marine, miscellaneous
Marine Hull business and 1/365th method on unexpired revenue accounts.
period in case of other businesses.
The reserve for unexpired risks represents the proportion
Premium deficiency is recognised if the ultimate amount of
of premium relating to periods of insurance subsequent to
expected net claims costs related expenses and maintenance the balance sheet date. Calculated principally on a daily
costs exceeds the sum of related premium carried forward
prorata basis, as stipulated in the IRDAI circular IRDAI/F&A/
to the subsequent accounting period as the reserve for
CIR/FA/056/03/2013. However in respect of marine cargo,
unexpired risks. Premium deficiency is maintained at company marine hull business a fixed percentage of 50 and 100
level and monitored by line of business.
respectively on net written premium of the year is adopted.
In accordance with IRDAI circular IRDAI/F&A/CIR/FA/126/
Re insurance Ceded : Un earned premium on reinsurance
07/2013, dated 3rd July, 2013 insurers are not required to
ceded is carried forward to the period of risk and set off
recognise premium deficiency arising out of Motor Third
against related unearned premium
Party Portfolio including esrtwhile Motor Pool, Declined Risk
Pool and Other Pools. Accordingly during the year the Indian Market Terrorism Risk Insurance Pool : A reserve for
company has not recognised premium deficiency on motor unexpired risk is recorded at 100% of net premium
third party portfolio which was accounted hitherto. retroceded to the Company from the pool during the year.

Premium income recogised based on varying risk pattern is nil.
Extent of premium income recognised based on varying risk
pattern is nil.
Sriram General Insurance
Reliance General Insurance Direct Business: Reserve for unexpired risk (risk related to
period subsequent to the Balance Sheet date) represents
Reserve for Unexpired Risk Reserve for unexpired risk is
that part of the net premium (i.e., premium, net of
made on the amount representing that part of the net
reinsurance ceded) which is attributable to, and set aside
premium written which attributable to, and to be allocated
for subsequent risks to be borne by the Company under
to the succeeding accounting period using 1/365 method for
contractual obligations on contract period basis or risk
all lines of business other than Marine Hull. In case of
period basis, is calculated on "day basis" in terms of Circular
Marine Hull business 100% of the Net Written Premium
No. IRDA/F&A/CIR/FA/126/07/2013 dated 3rd July 2013.
during the preceding twelve months is recognized as reserve
for Unexpired Risk.
Reinsurance accepted under pooling arrangement: The
entire amount of reinsurance accepted from Terrorism Pool,
Premium deficiency is recognised if the cost of expected net
for the current year on this account, net of claims and
claims costs related expenses and maintenance costs expenses is carried forward to the subsequent accounting
exceeds the sum of related premium carried forward to the
period as 'Reserve for Unexpired Risk' for subsequent risks,
subsequent accounting period as the reserve for unexpired if any, to be borne by the Company.
risks. Premium deficiency is recognised at the company level.
The Company considers maintenance costs as relevant costs
Premium deficiency is recognised if the ultimate amount of
incurred for ensuring claims handling operations. Premium
expected net claim costs related expenses and maintenance
deficiency is calculated and duly certified by the Appointed costs exceeds the related premium carried forward to the
Actuary of the Company.
subsequent accounting period as the reserve for unexpired risks.
Premium deficiency is calculated at business segment level.
The Company has created liability to the extent of 50% of
premium retroceded to the company through reserve for Extent of premium income recogised based on varying risk
unexpired risks. pattern is nil.
40 The Insurance Times, July 2022