Run a risk transfer test to decide between reinsurance accounting and deposit accounting, and trace the consequences through the financial statements.
Free CAS Exam 6-U.S. (Regulation and Financial Reporting) lesson in Reinsurance Accounting Principles. 8 min read, ~1,266 words.
Reinsurance accounting requires BOTH conditions: the reinsurer assumes significant insurance risk, and it is reasonably possible the reinsurer realizes a significant loss. Insurance risk has two parts: underwriting risk (amount) and timing risk (when paid). Common heuristic is the 10-10 rule: at least a 10% probability of at least a...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- D2
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