Statutory Earnings
Revenue based on conservative reserve requirements of various states. Statutory earnings do not meet generally accepted accounting principles (GAAP). A role of state regulation is to make certain that insurers have enough money set aside in statutory reserves to pay all future claims and that the company will remain solvent. For this reason, regulators take a conservative approach to setting reserve requirements. But because an increase in reserves translates into lower earnings for a stock insurer, investors, and securities analysts argue that they are not helpful in gauging the health of a company for investment purposes. Therefore, insurers calculate statutory earnings for regulators and another set of earnings, based on natural reserves, for investors.
Popular Insurance Terms
Premium required by an insurance company for plans subject to premium adjustment. The initial provisional premium is paid to put a commercial property or liability insurance policy into ...
Money set aside to pay for losses. Rather than buy insurance coverage for all potential losses, some businesses and individuals choose this form of self insurance to cover all or a portion ...
Based on historical loss experience, from which future loss experience is predicted. ...
One used to determine the life expectancy of annuitants. Annuity buyers are not representative of the population as a whole, or of life insurance buyers. Because annuities pay an income for ...
Coverage for a group of individuals under one policy. Usually, members belong to a particular company, union, or trade association. In a contributory plan a lump sum premium is paid by the ...
Circumstance in which there is a probability loss to personal property or real property resulting from property damage, destruction, or disappearance. ...
Proportion of losses incurred to premiums earned. This ratio indicates the amount of a premium dollar that is being consumed by losses. ...
Arbitrator who settles disputes over the amount of loss when an insurer and an insured do not agree. ...
Estate under the legal and administrative guidance of both the surety and the fiduciary. Any actions on the part of the estate requires the signatures of both in order to reduce the chances ...
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