Citation:

Brikena Preni, Ervenila Musta, Rinela Kapçiu. "Onerousity Analysis and PAA Eligibility Assessment Model in a Non-Life Insurance Company in Albania" International Research Journal of Economics and Management Studies, Vol. 3, No. 4, pp. 165-173, 2024.

Abstract:

Although the phrase “onerous contract test” is not used in the new standard, we would like to utilize it to determine if a set of contracts that are taken into account by the Premium Allocation Approach (PAA) is onerous. Unlike the general measurement model, which is used in the regular assessment of the Liability for Remaining Coverage (LRC) to establish whether a collection of contracts is or has become onerous, the PAA does not have such automatism. By deducting the insurance acquisition expenses of the group of contracts that are released over the coverage period, the LRC, under this method, indicates the deferred premium receipts. For contracts of this type, an onerous contract test must be derived from a comparison between the LRC under the PAA and the fulfillment cash flows determined based on the general measurement model.

References:

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Keywords:

Insurance, IFRS 17, Onerous Contract, Financial Reporting.