catastrophic reserve

any one explain catastrophe reserve maintained by Insurance companies.

Hello sir.

catastrophe reserve is a reserve which is to be created in accordance with the norms prescribed by the authority.

Investment of funds out of catastrophe reserve shall also made in accordance with the prescripttion of the authority.

catastrophic reserve means a reserve which is meant for meeting losses arising from an entirely unexpected set of events and not for any specific purpose.

This reserve is in the nature of an amount set asidefor the potential future liability against the insurance policies.

Losses from storms, tornadoes, floods, earthquakes and volcanic eruptions are called catastrophic losses.

Reserves against these types of losses are termed as Catastrophe Reserve.

IRDA has not yet specified any norms and rules for Catastrophe Reserve though it has been specified in the format.

However creation of catastrophe Reserve is very important in view of a study by the Munich Reinsurance Co. that natural catastrophes caused about $13 billion insured losses in 2002.

Note: Application of Accounting Standard-28, Impairment of Assets: IRDA Accounting Principles only prescribe for recognition and provision of impairment loss. The said Accounting Principles do not specify any method for determination assessment of Impairment loss. So the Accounting Standard 28 on Impairment of Assets will apply here for identification measurement, recognition, disclosures and reversal of Impairment Loss of the assets including investments and loans.

Regards

Rahul Gupta

Hello sir.

catastrophe reserve is a reserve which is to be created in accordance with the norms prescribed by the authority.

Investment of funds out of catastrophe reserve shall also made in accordance with the prescripttion of the authority.

catastrophic reserve means a reserve which is meant for meeting losses arising from an entirely unexpected set of events and not for any specific purpose.

This reserve is in the nature of an amount set asidefor the potential future liability against the insurance policies.

Losses from storms, tornadoes, floods, earthquakes and volcanic eruptions are called catastrophic losses.

Reserves against these types of losses are termed as Catastrophe Reserve.

IRDA has not yet specified any norms and rules for Catastrophe Reserve though it has been specified in the format.

However creation of catastrophe Reserve is very important in view of a study by the Munich Reinsurance Co. that natural catastrophes caused about $13 billion insured losses in 2002.

Note: Application of Accounting Standard-28, Impairment of Assets: IRDA Accounting Principles only prescribe for recognition and provision of impairment loss. The said Accounting Principles do not specify any method for determination assessment of Impairment loss. So the Accounting Standard 28 on Impairment of Assets will apply here for identification measurement, recognition, disclosures and reversal of Impairment Loss of the assets including investments and loans.

Regards

Rahul Gupta

Hello sir.

catastrophe reserve is a reserve which is to be created in accordance with the norms prescribed by the authority.

Investment of funds out of catastrophe reserve shall also made in accordance with the prescripttion of the authority.

catastrophic reserve means a reserve which is meant for meeting losses arising from an entirely unexpected set of events and not for any specific purpose.

This reserve is in the nature of an amount set asidefor the potential future liability against the insurance policies.

Losses from storms, tornadoes, floods, earthquakes and volcanic eruptions are called catastrophic losses.

Reserves against these types of losses are termed as Catastrophe Reserve.

IRDA has not yet specified any norms and rules for Catastrophe Reserve though it has been specified in the format.

However creation of catastrophe Reserve is very important in view of a study by the Munich Reinsurance Co. that natural catastrophes caused about $13 billion insured losses in 2002.

Note: Application of Accounting Standard-28, Impairment of Assets: IRDA Accounting Principles only prescribe for recognition and provision of impairment loss. The said Accounting Principles do not specify any method for determination assessment of Impairment loss. So the Accounting Standard 28 on Impairment of Assets will apply here for identification measurement, recognition, disclosures and reversal of Impairment Loss of the assets including investments and loans.

Regards

Rahul Gupta

Thanks Rahul

Best wishes for your Final Exams

Catastrophic reserve means a reserve which is meant for meeting losses arising from entirely unexpected set of events & not for any specific known purpose.

whether provision for catastrophe losses compulsory for reinsurance business, if yes under what circumstances and under which section. of the act