Coverage in Place
Agreements with major policyholders on specified amounts of coverage to be provided
May include annual caps on payments
Payments made when valid claims are presented
Home office examination of:
- Number of projected claims and payment patterns
- Projected legal and expense payments
- Size of the policyholder
- Geographic distribution of products or services sold by the policyholder
- Expected payments relative to limits
Reserves are established based upon the relative impact of these factors and management’s evaluation of possible outcomes
Reserves for Coverage in Place agreements are equal to the undiscounted expected payout under each agreement
Characteristics and Reserving Methods: