What Does Premium Deficiency Reserve Mean?

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What does Premium Deficiency Reserve mean? Read on to discover the definition & meaning of the term Premium Deficiency Reserve - to help you better understand the language used in insurance policies.

Premium Deficiency Reserve

Premium Deficiency Reserve

A premium deficiency reserve (PDR) is the amount needed by an insurer if the unearned premiums may not be sufficient to meet future claims and expenses. This is expressed as a liability in the financial statement. The reserve is a statutory requirement to make sure that a company will be able to pay their insured.

We hope the you have a better understanding of the meaning of Premium Deficiency Reserve.

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