Contingency reserve

{
  "id": "MLC-T-INS-000927",
  "term": "Contingency reserve",
  "field": "Insurance and risk management",
  "definition": "A reserve an insurer carries on top of its unearned premium and loss reserves, so that it can absorb losses in a severe economic downturn. Virginia requires a mortgage guaranty insurer to set aside 50 percent of earned premium, hold each allocation for 120 months, and draw on it for losses only when incurred losses in a twelve-month period exceed 35 percent of earned premium.",
  "url": "https://mlchart.com/terminology/insurance/contingency-reserve/"
}