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5 Cards in this Set
- Front
- Back
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funded accounts - explain
where used why? |
funded accounting or 3 yr accounting is when business written in each underwriting year is treated separately until the end of the third year.
so profit from business written in an UY is released only at the end of the 3 rd yr. purpose: 1.where UY fundamentally important 2.delays in premium payments, claim settlement or recoveries 3.where contracts on policies incepting basis - lloyds and reinsurance 4. marine and aviation 5.may be historical/conventional or imposed by legislation practice. |
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how funded accts operate? in the general case?
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1.fund set up in respect of acctng yrs n, n+1 and n+2.
2.credit premiums and debit cllm payments, expenses, commission. 3.roll up with investment return, other cashflows and account for non investible funds too 4.if funds seems insuff - augment by transfer from reserve or by calling Names for more money 5.if funds seem excessive - however no money released 6.at the end of yr n+2, the fund is transferred to a fund balance in respect of UY n and earlier. 7. reserves will be established for UYs n and prior 8. Any profits stemming may be realeased now. 9. although published accts will merge results for UYs n and prior 10.but company continue to measure results of each UY separately. |
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funded accts operate in the LLoyds case?
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1.At yr end n+2, outstanding liabilities transferred to another insurer
2.by payment of premium-reinsurance to close(RITC) 3.may or may not be transferred to incoming Names of the following year of the same syndicate. 4.if lot of uncertainty abt extent of o/s liabs then may be deemed impossible to calculate appropriate RITC. 5. in this case UY may be kept open for a further period. |
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explain one yr accts or accident yr accts?
where used? why? |
1.these consider income earned and outgo incurred in a year
2.permit profit release at the end of the yr. 3. personal lines, short tail commercial business 4.wide use for liability classes 5. why - historical/conventional/legislative reqt 6. relatively less delays in prem payt, claims settlement and recoveries 7. liabilities can be estimated reasonably well - less uncertainty |
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how AY accts operate?
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1. for all business exposed to risk of incrring clms (regrdless of when written)
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