Dear all, Today I’ve encountered with another problem. Schweser in Book 2 p. 23 writes about three main requirements for nonlife insurance, and I cannot understand what does “Assist in supplementing funds for liability claims” mean? There is nothing about it in Readings … Need your ideas …
Compare to life-insurance company. The liabilty claim of a non-life insurance company’s timing and amount are both unknow. Therefore, the investment port. of a non-life insurance company can help to pay claim in case when the claim timing and amount mis-matched the asset that was used pay for the claim. Does this help?
“Assist in supplementing funds for liability claims” The portfolio returns are used (in part) to pay claims to policyholders.