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Equalization Reserve |
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Equalization Reserve An account where an insurance company deposits funds to use in an emergency. That is, if an insurer finds itself in a position where it needs to pay more claims than it had anticipated, it may use funds from the equalization reserve to ensure that it fulfills its contractual obligations. An equalization reserve helps prevent any potential cash flow problems for the insurance company. It is especially useful in the event of an act of God, such as a flood or fire, where many policyholders live in the affected area. See also: Rainy day fund, Emergency fund. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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