8. Outstanding Claims Risk Component
8.1. Application
Paragraphs 8.2 to 8.4 apply to General Insurance Business.
8.2. Outstanding Claims Risk Component
(1) An AIFC-Incorporated Insurer’s Outstanding Claims Risk Component is the sum of the amounts obtained by multiplying the AIFC-Incorporated Insurer’s net liability for outstanding claims that falls within each Category of Insurance Business by the percentage applicable to that liability under table D.
Table D Percentage factor— Outstanding Claims Risk Component
Item | Categories | Direct insurance % | Reinsurance: proportional % | Reinsurance: non-proportional % |
1 | Category 1, 2 | 11 | 12 | 14 |
2 | Category 3, 18 | 9 | 10 | 12 |
3 | Category 4, 5, 6, 7, 8, 9, 16, 17, 19 | 11 | 12 | 14 |
4 | Category 10, 11, 12, 13, 14, 15, 20 | 14 | 15 | 17 |
2) In this rule:
net liability for outstanding claims means the liability in respect of future claims referred in PINS 8.3.2 (Treatment of value of future claims payments), less any expected reinsurance and non-reinsurance recoveries in respect of that liability as at the Solvency Reference Date.
8.3. AIFC-Incorporated Insurer may apply for different percentages
(1) The AFSA may, by written notice, allow the AIFC-Incorporated Insurer to use percentages other than those in table D 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 8%.
8.4. Certain contracts not included
(1) If an AIFC-Incorporated Insurer underwrites Contracts of Insurance in Categories 1 and 2 that are Long-Term Insurance Contracts, the AIFC-Incorporated Insurer need not calculate an Outstanding Claims Risk Component in respect of those contracts.
(2) For Contracts of Insurance in Categories 1 and 2 that are Long-Term Insurance Contracts, the AIFC-Incorporated Insurer must calculate a Long-Term Insurance Risk Component.