Entire Act

7. Premium Risk Component

7.1. Application

Paragraphs 7.2 to 7.4 apply to General Insurance Business.

7.2. Premium Risk Component

(1) An AIFC-Incorporated Insurer’s Premium Risk Component is the sum of the amounts obtained by multiplying the AIFC-Incorporated Insurer’s net premium liability that falls within each Category of General Insurance Business by the percentage applicable to that liability under table C.

Table C Percentage factor—Premium Risk Component

Item

Category of General Insurance Business

Direct insurance %

Reinsurance: proportional %

Reinsurance: non-proportional %

1

Category 1, 2

16

18

21

2

Category 3, 18

13

15

18

3

Category 4, 5, 6, 7, 8, 9, 16, 17, 19

16

18

21

4

Category 10, 11, 12, 13, 14, 15, 20

21

23

26

(2) In this rule: net premium liability means premium liability less any expected reinsurance and nonreinsurance recoveries in respect of that premium liability as at the Solvency Reference Date.

7.3. AIFC-Incorporated Insurer may apply for different percentages

(1) The AFSA may, on application of an AIFC-Incorporated Insurer conducting General Insurance Business in Category 1, give written consent to the use of percentages other than those in table C if the AFSA is satisfied that:

  • (a) adequate mortality and morbidity information exists in respect of that business; and
  • (b) the information provides a reasonable basis for reliance on actuarial principles.

(2) The percentages that may be used must be those stated in the notice but may not be lower than:

  • (a) 12% in the case of direct insurance and proportional reinsurance; and
  • (b) 16% in the case of non-proportional reinsurance.

7.4. Certain contracts not included

(1) If an AIFC-Incorporated Insurer underwrites Contracts of Insurance in General Insurance Categories 1 and 2 that are Long-Term Insurance Contracts, the AIFC-Incorporated Insurer need not calculate a Premium Risk component in respect of those contracts.

(2) For Contracts of Insurance in General Insurance Categories 1 and 2 that are Long-Term Insurance contracts, the AIFC-Incorporated Insurer must calculate a Long-Term Insurance Risk Component.