SSAP65: 2005 Q26b
October 5th, 2011
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Another topic that is raising a lot of questions…why is the answer to part b 0?
This is a trick question. There are 2 ways to treat a recoverable in the deductible layer:
-if the recoverable is associated with an unpaid loss (by the insurer), we simply reduce the amount of the reserve
-if the recoverable is associated a paid loss, we need to create a recoverable asset.
In this case, the loss is unpaid, so we need to apply the former treatment (reduce the reserve, as opposed to creating an asset).
Since there is no asset, there can be no non-admitted asset. Therefore the non admitted asset is 0.