DEFINITION of 'Calendar Year Accounting Incurred Losses '

Calendar year accounting incurred losses is a term used in the insurance industry to describe the losses incurred by an insurance company by the payment of claims, the re-evaluation of claims already in the company's books and any negative or positive changes in loss reserves in a particular calendar year.

BREAKING DOWN 'Calendar Year Accounting Incurred Losses '

Loss reserves are the amount of money budgeted or set aside by the management of an insurance company, at the beginning of the year, for payment of old and new claims by the company.

The insurance industry views the amounts paid out to claimants as losses because the money expended for claims is money that is going out of the company as opposed to remaining with it. So, at the end of every calendar year, insurance companies look at their reserves and calculate losses by subtracting the amounts paid for old and new claims, any changes in reserve levels made by management and any changes in claims already in the books that haven't been paid out yet.

RELATED TERMS
  1. Claims Reserve

    The claims reserve is money that is earmarked for the eventual ...
  2. Losses and Loss-Adjustment Expense

    The portion of an insurance company’s reserves set aside for ...
  3. Loss Development

    The difference between the final losses recorded by an insurer ...
  4. Expected Loss Ratio (ELR) Method

    A technique used to determine the projected amount of claims ...
  5. Loss Ratio

    The difference between the ratios of premiums paid to an insurance ...
  6. Chain Ladder Method (CLM)

    A method for calculating the claims reserve requirement in an ...
Related Articles
  1. Insights

    How Insurance Companies Detect Insurance Scams

    Insurance companies have full fraud detection departments tasked with both preventing scams and recouping money paid out for false claims.
  2. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  3. Insurance

    How To Invest In Insurance Companies

    Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment ...
  4. Insurance

    6 Huge Insurance Claims

    Next time you think that insurance is a waste of your money, think about these expensive claims.
  5. Insurance

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  6. Insurance

    Will Filing An Insurance Claim Raise Your Rates?

    An accident can mean higher insurance costs - even if it wasn't your fault.
  7. Investing

    Elements of Insurable Risks: A Quick Guide

    Explore the elements of insurable risk: due to chance, measurable and definite, predictability, noncatastrophic, random selection and large loss exposure.
  8. Insurance

    How Are Home Insurance Rates Determined?

    You home's value is one of the driving forces behind your home insurance premium and the amount of coverage you receive.
  9. Insurance

    Life Insurance: How Long Does It Take To Get Paid?

    How to file for a life insurance payout – and how long it takes to receive it. Plus, new ways to plan for payments that provide an income stream.
RELATED FAQS
  1. What is the main business model for insurance companies?

    Read about the most important components of an insurance company business model, such as risk pricing, float investing and ... Read Answer >>
  2. What is the usual profit margin for a company in the insurance sector?

    Learn what the average profit margin is within the insurance industry, and what factors can affect the profitability of an ... Read Answer >>
  3. How does the combined ratio measure the financial health of insurance companies?

    Learn about the combined ratio, what the combined ratio measures and how it is used to measure the financial health of insurance ... Read Answer >>
  4. What risks do I face when investing in the insurance sector?

    Read about the unique challenges faced by insurers, and learn how those challenges manifest themselves as risks for equity ... Read Answer >>
Hot Definitions
  1. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  2. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  3. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  4. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  5. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
Trading Center