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Premium deficiency reserve requirements

January 16th, 2013

By Javier Sanabria

In the United States, premium deficiency reserves (PDRs) are one of several categories of accident and health liabilities required under statutory accounting principles, GAAP, and by actuarial standards of practice.

The topic of PDRs has been discussed in various authoritative guidance materials and also in published actuarial literature. Despite all of this published information, issues concerning the calculation and reporting of this reserve are still interpreted differently among various industry professionals such as actuaries, accountants, and insurance regulators.

Professional disagreements on PDRs often arise because of the level of perceived authoritativeness of source documents. Confusion also arises from the lack of specificity, inconsistency in terminology, and apparent contradictions among the documents.

In this report, Michael Weilant addresses 15 key questions surrounding statutory PDRs.

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