Unearned Premium Reserve
Fund that contains the portion of the premium that has been paid in advance for insurance that has not yet been provided. For example, if a business pays an annual premium of $1000 on January 1, the money is not earned by the insurer until the insurance coverage has been provided. On July 1, $500 would have been earned and $500 would remain as unearned premium, belonging to the policyholder. If either party cancels the contract, the insurer must have the unearned premium ready to refund. For this reason, insurance regulators require that insurers maintain an unearned premium reserve so that, in the event an insurer must be liquidated, there is enough money to pay claims and refund the unearned premium. Because computations for individual policies would be cumbersome, regulators have devised formulas for figuring unearned premium reserves.
Popular Insurance Terms
Act that prohibits employers from discriminating against employees in employee benefit plans, regarding contributions or benefits based on race or gender. ...
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Account established and administered by a state agency to finance a mandatory insurance program, for example, workers compensation insurance. ...
Now-defunct bureau founded by fire insurance underwriters in 1866 to work for fire prevention and loss control. The board helped standardize the fire insurance policy. In the mid-1960s, the ...
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Same as term Captive Agent: representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first ...
Early payout of anticipated death benefits from a rider attached to an existing policy or from a separate policy. The purpose is to allow the terminally ill insured an additional source of ...
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