Extended Reporting Endorsements

patbaker12

For defined period endorsements, are loss reserves typically recorded as UEPR? Similarly are indefinite period endorsement reserves typically recorded as loss reserves? Or is the classification of reserves dependent on however the insurer decides to record them?

graham

According to COPLFR (which references SSAP 65):

For coverage for a fixed period:

• premium shall be earned over the term of the fixed period, the reporting entity shall establish an unearned premium reserve for the unexpired portion of the premium
• record losses as reported

So premiums not yet earned would go into UEPR and unpaid losses would go into loss reserves.

For indefinite reporting periods:

• premium shall be fully earned (so there is no associated UEPR)
• loss and expense liability associated with unreported claims shall be recognized immediately

The difference in treatment depends on whether the endorsement is for a fixed or indefinite period. But loss reserves should never be classified as UEPR.