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. Losses Incurred

    Losses incurred refers to benefits paid to policyholders during ...
  2. Calendar Year Experience

    Calendar year experience is the difference between the premiums ...
  3. Losses and Loss-Adjustment Expense

    Losses and loss-adjustment expense is the portion of an insurance ...
  4. Insurance Claim

    An insurance claim is a formal request to an insurance company ...
  5. Expected Loss Ratio (ELR) Method

    Expected loss ratio method is a technique used to determine the ...
  6. Central Loss Fund

    A fund set aside by some states in order to cover policyholder ...
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own, your insurance contract.
  2. Insurance

    How To Value An Insurance Company

    In the insurance space, accurate predictions of metrics such as ROE are important, and paying a low P/B can help put the odds in investors' favor.
  3. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  4. 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.
  5. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  6. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  7. Insurance

    Insurance Companies Vs. Banks: Separate And Not Equal

    Insurance companies and banks are both financial intermediaries. However, they don't always face the same risks and are regulated by different authorities.
  8. Insurance

    Behind the Law of Large Numbers in the Insurance Industry

    Discover how the law of large numbers helps insurance companies cope with risk, and why the theory does not always live up to reality.
  9. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
RELATED FAQS
  1. Loss Ratio vs Combined Ratio

    Learn about the loss ratio and combined ratio, what the two ratios measure and the main difference between the two. Read Answer >>
  2. What are insurance sector companies usual profit margins?

    Understand what the average profit margin for a company that serves in the insurance sector and what factors can affect the ... Read Answer >>
  3. 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, investing and claims ... Read Answer >>
Hot Definitions
  1. Capital Asset Pricing Model - CAPM

    Capital Asset Pricing Model (CAPM) is a model that describes the relationship between risk and expected return and that is ...
  2. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  3. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  4. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  5. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  6. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
Trading Center