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  • General Insurance Business

    • CA-5.1.3

      The amount of insurance liabilities that are general insurance business liabilities must be determined in accordance with International Accounting Standards applicable to insurance business or until such a standard or standards come into effect, with the provisions of Paragraphs CA-5.1.4 to CA-5.1.10.

      Amended: January 2007

    • CA-5.1.4

      Unearned premiums and unearned commission income in respect of the general insurance business must be calculated by a method which has due regard to the period of the policy and the incidence of risk throughout that period. Time apportionment of the premium over the period of policy cover is normally appropriate unless there is a marked unevenness in the incidence of risk over that period, in which case a basis which reflects the profile of risk must be used.

      Amended: January 2007

    • CA-5.1.5

      Where a time apportionment method is used that method must be at least as accurate as the '24ths basis' of premium income recognition, except for reinsurers for which transactions are only recorded every quarter where the method used must be at least as appropriate as the 1/8th basis. Where a time apportionment method is deemed inappropriate due to uncertainty in the period of insurance, such as for marine cargo, the method used must be disclosed in the actuarial report required as per Chapter AA-4.

      Amended: October 2009

    • CA-5.1.6

      Unearned reinsurance premiums ceded must be calculated on the basis of the principles specified in Paragraphs CA-5.1.4 and CA-5.1.5.

    • CA-5.1.7

      Unexpired risk reserves (URR) should be calculated as the prospective estimate of expected future payments arising from future events insured under policies in force as at the valuation date and also include allowance for insurance firm's expenses including overheads and cost of reinsurance, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and must allow for any expected future premium refund. Where the unearned premium less unearned commission calculated in Paragraphs CA-5.1.4to CA-5.1.6 above is less than the unexpired risk reserves, the company must set up a suitable additional provision for unexpired risks to cover this deficiency (premium deficiency). This premium deficiency provisions must be calculated at a prudent level.

      Amended: October 2009
      Amended: January 2007

    • CA-5.1.7A

      In calculating the URR as required under Paragraph CA-5.1.7, the actuary report must clearly disclose if the URR has been calculated on and individual class basis or on total company basis and must justify the approach taken in the adopted method.

      Adopted: October 2009

    • CA-5.1.8

      Provision must be made for the expected ultimate cost of settlement of all claims incurred in respect of events up to that date, whether reported or not, together with related claims handling expenses, less amounts already paid. This provision should be calculated at a prudent level. This should include a provision for claims reported, claims incurred but not reported (IBNR), claims incurred but not enough reserved (IBNER) and direct and indirect claims handling expenses such as investigation fees, loss adjustment fees, legal fees, labour charges and the expected internal costs that the insurer expects to incur when settling these claims. If a liability is known to exist but there is uncertainty as to its eventual amount, a provision should nevertheless be made.

      Amended: October 2009
      Amended: January 2007

    • CA-5.1.8A

      The IBNR includes the IBNER. The distinction between IBNR and IBNER is made for a consistent approach to matching of income and expenses.

      Adopted: October 2009

    • CA-5.1.9

      The level of claims provisions must be set such that:

      (a) No adverse run-off deviation is envisaged;
      (b) The provision is determined having regard to the range of uncertainty as to the eventual outcome for the category of business in question; and
      (c) In circumstances where there exists considerable uncertainty concerning future events, a degree of caution is exercised such that liabilities are not understated.
      (d) If it is less than the aggregate case-by-case provision for claims reported set up by the claims manager, the insurance firm must disclose in writing to the CBB the justification for such a release of reserves.
      Amended: October 2009
      Amended: January 2007

    • CA-5.1.10

      In determining the sufficiency of evidence and the ability to measure claims costs, an insurance firm must take all reasonable steps to ensure that it has appropriate information with regard to its claims exposures.