Question

When should a Catastrophe Reserve be created?

a.

A Catastrophe Reserve should be created only when a catastrophe occurs

b.

A Catastrophe Reserve should be created annually

c.

A Catastrophe Reserve should be created in accordance with the norms prescribed by the Authority

d.

A Catastrophe Reserve should not be created

Posted under IC 14 Regulations of Insurance Business

Answer: (c).A Catastrophe Reserve should be created in accordance with the norms prescribed by the Authority Explanation:A Catastrophe Reserve should be created in accordance with the norms, if any, prescribed by the Authority, according to insurance accounting guidelines.

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