Calendar Year Accounting Incurred Losses
Categories: Accounting, Metrics
Unfortunately for insurance companies, there comes a time when they have to pay out an insurance claim to a policyholder. Calendar year accounting incurred losses refers to all the claims paid during a particular calendar year, January 1 through December 31.
The figure might include claims filed in previous years but due to a dispute or other delays they are not paid until the next calendar year. Another source of accounting incurred losses is a revaluation of claims that have already been processed and recorded in their books. Perhaps they were only going to pay Mary Accidentprone $5,000 after she drove through her closed garage door, but upon further investigation the company decided they had to pay out another $1,000.
Another probable source of incurred losses is when an insurance company has to increase the amount of money it has in reserves in order to cover claims. Required reserve levels are set by state governments at about 8%-12% of a company's total revenue. Their revenue changes throughout the year, so their reserves might have to increase and be recorded as a calendar year accounting incurred loss.
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Finance: What is a Fiscal Year v. Calend...28 Views
Finance allah shmoop what is a fiscal year versus a
calendar year Well let's start with the latter calendar year
that's this thing It starts january one with a hangover
and ends at midnight December thirty one with a big
fat ball dropping in new york No this thing different
ball paul's Never All right So that's a calendar year
and okay so what is a fiscal year And how
is it different from a calendar year Well it isn't
always different Actually a fiscal year just refers to the
one year period in which companies track and report their
financial story Some companies report from january one to december
thirty one right like their fiscal year maps on top
of the calendar year But in some cases this reporting
system was misleading or problematic for investors Why All right
Well let's take macy's please They used to be somebody
Somebody They had parades and white flower day sales and
people used to actually go to their stores So macy's
did some huge percentage of its sales for the year
right around christmas And before you know computers were really
a thing it often took weeks or months toe fairly
And accurately add everything up so macy's among others decided
to change their fiscal year They were powerful back then
so you know they could do things like that So
they moved their year to run from july one until
june thirty that is that became their fiscal year it's
still a year still three hundred sixty five days still
everything the same With the exception of the start and
end points this way When things were relatively quiet at
the end of june the macy's bean counters could properly
count their year end beans in relative peace and harmony
Having caught up from the day luge of frenzied christmas
sales it gets even more complex in that some companies
wanted to be fully off kilter for any comparable calendar
years Oracle the database company for example is one of
them Savvy buyers of databases would wait until just before
the quarter ended for oracle hoping to negotiate better rates
in renting their database needs It was dangerous for a
company to miss its quarter with so much competition in
silicon valley from startups to steal those precious engineers from
big companies and put him into running a startups You
know big companies and they paid in cash and modest
stock options You can't really get rich these days working
at oracle if oracle ever missed a quarter while it
would hemorrhage engineers to the venture capital people hovering in
the hallways so oracle moved its fiscal ofthe month I'ii
february may august november kind of vibe so that wouldn't
be quite as held hostage by those savvy database renters
hoping for a macy style midnight white flower day sale
Now that's something worthy of a parade There's a database 00:03:00.715 --> [endTime] parade