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Methods of calculating reserves in general insurance are different to those used in Life Insurance , Pension s and Health Insurance since general insurance contracts are typically of a much shorter duration. Most general insurance contracts are written for a period of one year. Typically there is only one payment of Premium at the start of the contract in exchange for coverage over the year. Reserves are calculated differently to contracts of a longer duration with multiple premium payments since there are no future premiums to consider in this case. The reserves are calculated by forecasting future losses from past losses. The more popular statistical methods in claims reserving are the Chain Ladder Method and the Bornhuetter Ferguson Method . |
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