when an insurance company chooses to keep reserves that are in excess of the minimum amount required under the rules based approach these are referred to as non statutory or voluntary reserves 
regardless of the approach used to calculate them statutory reserves will generally cause insurance companies to lose out on some potential profits however they benefit the insurance markets as a whole by making insurance customers more confident that their insurers will be able to withstand difficult economic circumstances and stand behind their policies example of statutory reservesconsider the case of xyz insurance according to the statutory reserve requirements of its state insurance regulator xyz would be required to keep 50 million in reserve based on the rules based approach however after considering the competitive landscape in its state and reviewing the past performance of its insurance portfolio xyz decided to use the principles based approach and set its statutory reserves above the minimum required level although the additional reserves would likely cost it in terms of lost investment income xyz reasoned that this more conservative approach would strengthen its image as a responsible insurer and make it well positioned to navigate any potential recession or other economic headwinds 