What is Expense Allowance?
Expense Allowance The provision included in insurance premiums or reserves to cover the insurer’s operating expenses such as administration, commissions, and acquisition costs.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Expense Allowance” Used in Practice?
Accurate calculation of expense allowance ensures that premiums are sufficient to meet policy servicing and administrative costs.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Expense Allowance?
The provision included in insurance premiums or reserves to cover the insurer’s operating expenses such as administration, commissions, and acquisition costs.
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