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Funded Accounting Reserving

C

Cathy

Member
I'm confused about reserving for Three-Year Accounting. Are they calculated at the end of each year or just at the end of the third year?

The Acted notes at the top of p17 say "the reserves at the end of the first year will cover unexpired risks and outstanding claims".
But the solution to Q6.1 in the Q&A bank says "Unexpired risk reserves and unearned premium reserves will not be required for three year accounts".

So do the reserves cover unexpired risks or not?
 
Yes and no!

In the actual accounts filed (at the end of the third year, for example), then no, you wouldn't have any unexpired risks etc.

But irrespective of when you actually file your accounts, all companies and/or syndicates would undoubtedly look at the accounting situation at the end of each year - at least to assess how things are progressing. And for that purpose, yes, they would be interested in unexpired risks.
 
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