Question

What is the purpose of making an additional provision for claims incurred but not reported (IBNR)?

a.

To account for outstanding claims reported after the accounting year

b.

To compensate for claims that have been overestimated

c.

To provide additional profit for the reinsurer

d.

To adjust for discrepancies in premium calculations

Answer: (a).To account for outstanding claims reported after the accounting year Explanation:The purpose of making an additional provision for claims incurred but not reported (IBNR) is to account for outstanding claims that have been incurred but not yet reported by the end of the accounting year. By including this provision, reinsurers can ensure that they have accounted for potential future claim payments that may arise from these unreported claims, enhancing the accuracy of their financial statements.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is the purpose of making an additional provision for claims incurred but not reported (IBNR)?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the primary purpose of controlling accumulation hazards in reinsurance?

Q. What is the role of underwriters in controlling accumulation hazards?

Q. How is the magnitude of an earthquake measured?

Q. What does the Modified Mercalli Scale measure?

Q. What are some factors that influence the effect of an earthquake on a structure?

Q. Which of the following regions are highly exposed to earthquakes?

Q. How can underwriters determine the zones that may be affected by earthquake damage?

Q. What is the purpose of maintaining accumulation control sheets?

Q. Which regions are prone to volcanic eruptions?

Q. What approach should underwriters take to accumulations arising from catastrophic perils?

Q. Why do ceding insurers and reinsurers need periodical statistics of their business?

Q. What is the purpose of establishing a decision support system in reinsurance?

Q. Which of the following factors can affect underlying statistical trends in reinsurance?

Q. Who are the users of the information produced from a statistical base in insurance and reinsurance organizations?

Q. What are some of the uses of the information produced from a statistical base in insurance and reinsurance?

Q. What is the purpose of reconciling balances and reviewing cash flow in the context of evolving a statistical system?

Q. What type of information is required for retrocession treaties in the context of evolving a statistical system?

Q. In the case of _________________, all business exchanged with the insurer or reinsurer is summarised in a sheet, showing cessions on one side and matching acceptances on the other side.

Q. With the wider use of computers and telecommunications, there is a growing preference for simplified administration procedures in the reinsurance industry. This has led to:

Q. Electronic data processing (EDP) techniques in reinsurance have gained acceptance:

Recommended Subjects

Are you eager to expand your knowledge beyond IC85 Reinsurance Management? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!