Unearned Premium Reserve for Long-Term Policies

This paper describes and evaluates the statutory rule regarding the establishment of unearned premium reserves for long-term policies and discusses the consistency of the rule with statutory laws, procedures and philosophy, specifically as regards the rule's treatment of aggregation across policy years, discount date, risk margin and application to in-force policies. The paper also provides an example of the possible effect of the rule on an insurer's statutory earned premium.