Which of the following statements is true?

Question

Quizplus · Accepted Answer

Policy liabilities are the expected payment commitments that insurers have on existing policy contracts. It is an important liability item on their balance sheet as they need to ensure that they have enough assets to meet these commitments. Option A is incorrect because it refers to "worst-case" payment commitments, which is not accurate as policy liabilities reflect the expected payment commitments. Option B is incorrect as policy liabilities are a liability item, not an asset item. Option C is also incorrect as it refers to "expected payment inflows," which is not accurate as policy liabilities reflect expected payment commitments, not inflows.

Which of the Following Statements Is True