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What is the excess of loss reinsurance coverage effect on unearned premium?
Wiki User
∙ 11y ago
If we're talking about P & C insurors, SSAP 62R states that when payments are made for prospective reinsurance, both written premium and earned premium are reduced.
I take this to mean that the liability account 'Unearned Premiums' would not reflect any amount parenthetically for 'after deducting unearned premiums for reinsurance', but I don't have much confidence that I'm interpreting it correctly.
Wiki User
∙ 11y ago
Excess of loss reinsurance coverage typically has no direct effect on unearned premium. Unearned premium represents the portion of an insurance policy premium that has been paid in advance but has not yet been "earned" by the insurer due to the coverage period still being in progress. Excess of loss reinsurance helps protect the insurer from catastrophic losses by providing additional coverage, but it does not impact the timing or calculation of unearned premium.
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