Accounting framework: annual accounting: Unexpired Risks Provision (URP)
An unexpired risks provision (URP) may also be established where accounts are drawn up on an annual basis. This is a provision for anticipated losses on the ‘unearned’ portion of premiums that have been deferred to the following accounting period.
The provision will only be set up where anticipated claims and related expenses attributable to the unexpired periods of policies in force at the balance sheet date exceed the amount of the unearned premium provision in relation to those policies, after deducting any deferred acquisition costs. In accounting terms it is analogous to a provision for an onerous contract.