Page 62 - MC14326 all pages

58 | The South African Insurance Industry Survey 2016

The impact of the application of the current unearned premium approach, the PAA and the BBA on the income statement at inception and one
month into the period is as follows:

Income statement Cummulative accounts

Gross written premium 1 April - Day 1 30 April - after 1 month
UPP movement
Revenue recognised for Current basis PAA BBA Current basis PAA BAA
coverage - -
Release of risk 120 000 - - 120 000 - -
adjustment - -
Release of CSM (120 000) - (110 000) -
Expected claims 35
Acquistion costs -- - 10 000
Revenue 4 100
-- --- 3 700
2 000
-- -- 9 835
-- --
-- --
-- - 10 000 10 000

Reported claims - - - (2 650) (2 650) (2 650)
incurred
- - - (1 250) (1 050) (1 050)
Movement in IBNR - - - - (165) -
- - - (3 900) (3 865) (3 700)
Risk adjustment

Claims incurred

Acquisition costs (24 000) - - (24 000) (2 000) (2 000)

incurred

Movement in DAC 24 000 - - 22 000 - (2 000)

Acquisition expense - - - (2 000) (2 000) (2 000)

Profit or loss - - - 4100 4 135 4 135