Hi, I'm not sure whether we should be calculating claims handling reserves in accounts questions etc For example in Sep2004 Q2 (iv)Paper 2 there is no mention of CHR (not even in the assumptions) Are CHR included in UK GAAP accounts? Also, in the same question one of the assumptions says "premium levels remain constant for the period covered by the financial plan". What does this mean? Thanks
CHR are normally included within the claims reserves themselves. For example, loss ratios normally include allowance for CHE. I take the assumption you quote to mean 'no future rate changes'.
Thanks I wouldn't agree that normally CHE (ULAE) are included in loss ratios. I would agree for ALAE e.g. direct legal costs. In fact, ULAE reserves are an unknown in many local Gaap accounts. They are (always?) included in IFRS accounts. Are they included in UK Gaap ?
Yes, sorry, I was referring to ALAE. AFAIK, ULAE are included in both GAAP and IFRS accounts, but I'm not an accounting expert so would have to check (although I'd hope this is beyond the knowledge required for SA3).
