Question

How is the cost of reserves accounted for in insurance pricing?

a.

By adding it as a separate expense item

b.

By subtracting it from expected outgo

c.

By considering it as an item in expected outgo

d.

By ignoring it in the pricing calculation

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).By considering it as an item in expected outgo Explanation:The cost of reserves is accounted for in insurance pricing by considering it as an item in expected outgo.

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Q. How is the cost of reserves accounted for in insurance pricing?
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