Exam 6C Practice Question 13
Study guide: Exam 6C
On April 1, a P&C insurer issues a group of one-year contracts, measured under the premium allocation approach. Expected premium of 2,000 is received at issue, and directly attributable acquisition cash flows of 300 are paid at issue. The insurer has elected to expense acquisition cash flows when incurred. The risk is spread evenly over the coverage period, so expected premium receipts are allocated on the basis of the passage of time. Ignore discounting.
Calculate the insurance revenue for this group for the financial year ending December 31.
- A) 500
- B) 1,200
- C) 1,275
- D) 1,500
- E) 2,000
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