The unearned premium reserve of an insurer is
A)an asset representing the investments made with premium income.
B)a liability representing the unearned portion of gross premiums on outstanding policies.
C)a liability representing claims that have been filed,but not yet paid.
D)the portion of the insurer's net worth belonging to policyowners.

Question

Quizplus · Accepted Answer

The unearned premium reserve is a liability that represents the amount of gross premiums that have been collected but have not yet been earned by the insurer because the policy period has not yet ended. It is a reserve set aside to cover potential claims during the remainder of the policy period.

The Unearned Premium Reserve of an Insurer Is