CERTYNEX IFRS ACADEMY

An analyst rules out the premium allocation approach for a group of nine-month contracts, writing: "The liability for remaining coverage could differ significantly from that of the general model; the approach is therefore excluded." What is the error in this reasoning?

It forgets that the approach is mandatory for any group whose coverage period is under one year.

It confuses the coverage period with the claims settlement period of the group.

It requires no significant difference, whereas coverage of one year or less per contract is enough.

It compares the liability with the general model at the closing date, whereas the comparison is made at the inception of the group.