Question

What is the purpose of the Unexpired Risk Reserve?

a.

To account for premiums received but not yet earned

b.

To cover the shortfall in premiums due to inadequate rates

c.

To set aside funds for outstanding claims

d.

To mitigate the impact of fluctuating market conditions

Posted under IC 14 Regulations of Insurance Business

Answer: (b).To cover the shortfall in premiums due to inadequate rates Explanation:The Unexpired Risk Reserve is set up to cover the shortfall in premiums due to inadequate rates, especially in retrospect if premiums written during a year are considered inadequate due to market conditions like a soft market.

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Q. What is the purpose of the Unexpired Risk Reserve?
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