Prudence Principal
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arya3340
Rishabh Surana
arya3340 wrote:Anyone aware about prudence principal in calculating reserves.
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Actuarial Info mobile appIt is a conservatism principle where companies tend to understate assets & income & overstate future liabilities & expenses which help them to play safe.
It helps them in carrying out Reserving accordingly in order to reduce their financial risk.
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Actuarial Info mobile appMayank Goyal
RISHABH wrote:
arya3340 wrote:Anyone aware about prudence principal in calculating reserves.
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Actuarial Info mobile app
It is a conservatism principle where companies tend to understate assets & income & overstate future liabilities & expenses which help them to play safe.It helps them in carrying out Reserving accordingly in order to reduce their financial risk.
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Actuarial Info mobile app
Agreed.Arpit Surana
It actually depends. In life insurance, it is different. Suppose if we are launching a product in 2010 then the mortality, lapses, and all the assumptions will be based on 2010 But if we are calculating the reserves for 2020 (since reserving is done each year), the assumptions would be of 2020 not 2010.
arya3340 wrote:I just have one more question i.e. are the assumption used for pricing and calculating reserves are same and if different than what’s the difference.
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