A Study Of Loss Reserves Of Property-Liability Insurance Industry In Taiwan

The operation of the insurance industry is based on the abundant application of the Law of Large Number for its character of public interest. Consequently, the performance of the operation will not only greatly influence on the development of insurance industry but also affect the privilege of the insured objects directly. Undoubtedly, a stable financial situation is the key factor to the activities of the insurance business, because it assures the insured objects will be benefited completely. And legal reserve is one of the important indices in supervising the operation. Therefore, laws related to the legal reserve are legislated in many countries. With the strict and specific laws, governments can supervise insurance industry efficiently, and thus the insurance corporations have the regulations to follow.First, so-called "various reserve funds" is divided into four categorizations—policy reserve (according to long-term deposit returns), unearned premium reserve (according to insurance period expires or not), special reserve (according to catastrophe loss), and loss reserve (according to insurance loss happen). Second, in this research the essence of the loss reserve is still different from other statutory reserves. Basically, the insurance industry retains loss reserve which is mainly used for the incurred but not reported losses (IBNR). Compared with other liability reserves, the purpose of the two reserves is significantly different. Based on this, reserve which is paid immediately is classified as "First Class Reserve"; others such as unearned premium reserve, special loss and so on are classified as "Second Class Reserve". According to this, we can demonstrate the importance of the indemnity reserve fund in the system of the entire insurance legal reserve.Furthermore, we view the regulations of the loss reserve in aspects of the drawing scope, the drawing foundation, the drawing way, and the drawing standard, comparing to the United States, Britain, Japan and fund there is still a lot for discussions. The appropriateness of the loss reserve will directly affect the insurance policyholders' rights and interests supposed to exist. When loss reserve is lower to the standard, it may make the solvency of insurance industry become insufficiently. But when loss reserve is over the request, it will also affect the financial report. On this base, the research proposes the innovations and the developments, which are divided into six major aspects raises 17 suggestions items for the authority to cogitate. In addition, it can be discharged effectively and achieve the anticipated target, for the attributions of the suggestions are different from the authority.Above all, how to establish a system for retaining loss reserve in property-liability insurance to match the environment of the domestic insurance management and the regulations that the government need is the most important step for the development of the internationalization and liberalization in the 21st century !...