Question

When should premium reserve for unexpired risks be created?

a.

Premium reserve for unexpired risks should be created at the end of the financial year

b.

Premium reserve for unexpired risks should be created immediately upon receipt of premium

c.

Premium reserve for unexpired risks should be created over the contract period or the period of risk

d.

Premium reserve for unexpired risks is not required

Posted under IC 14 Regulations of Insurance Business

Answer: (c).Premium reserve for unexpired risks should be created over the contract period or the period of risk Explanation:Premium reserve for unexpired risks should be created over the contract period or the period of risk, as per insurance accounting standards.

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Q. When should premium reserve for unexpired risks be created?
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