Benchmark Surplus

DEFINITION of 'Benchmark Surplus'

Benchmark surplus is an insurance term that refers to the amount of surplus from an additional capital source that would be necessary to act as a supplement to the cash flow. The benchmark surplus would be required when unforeseen contingencies occur that could disrupt or impair the cash flow necessary for an insurance company to make future benefit payments for which it has already received the premiums.

BREAKING DOWN 'Benchmark Surplus'

Benchmark surplus refers to any needed additional equity or surplus beyond the equity or surplus currently held by an insurance company or industry. Benchmark surplus is the liquid assets required in addition to those currently held currently held, that an insurance company would need to cover additional benefit claims.

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RELATED FAQS
  1. What is the difference between consumer surplus and economic surplus?

    Learn the difference between consumer surplus and economic surplus, how the concepts are related and the important theoretical ... Read Answer >>
  2. For what purpose is the consumer surplus figure used?

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  3. Why are economists interested in the consumer surplus?

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  4. What's the difference between economic value added (EVA) and producer surplus?

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