Under a deferral and matching approach, losses are only recognized and reserved for after the event triggering coverage has occurred, ., for events during the expired portion of the policy period. Losses arising from the unexpired portion of the policy are not covered by the loss reserve but instead are covered by the Unearned Premium Reserve. It is possible that either reserve may become deficient to cover their respective losses. The recorded liability for loss reserves may become deficient to cover the estimated ultimate cost of incurred losses. Possible causes include new information or.
