Ceded UPR vs. Expected Reinsurance Premium

dogechowdogechow
edited April 2022 in CIA.PrLiabs

Could you please explain the difference between these two items in the Premium Liabilities exhibit? Why is there an additional reinsurance cost that is subtracted out of Net UPR when calculating net premium liabilities?

Comments

  • Staff-T1Staff-T1
    edited April 2022

    Let's say we have a policy written from Jan 1 to Dec 31 2021.
    We also have a reinsurance contract that covers risks on a loss occurring basis every year which we renew on June 30th every year.
    At January 1 when we calculate our DPAC, we will cede some unearned premium to our currently in force reinsurance. However, we also need to take into account the future reinsurance cost for our renewal which is going to happen after June 30th. This is the future reinsurance premium.

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