CIA.IFRS17-PAA Flashcards
1
Q
Is a group PAA eligible if an insurer expects significant variability in the FCFs?
A
No, this disqualifies use of PAA
2
Q
Identify 2 ways to determine if LRC using PAA differs materially from LRC using GMA.
A
- Quantitative assessment:
• calculate LRC using PAA & GMA and verify the difference is ≤ materiality threshold - Qualitative assessment:
• assess a similar group of contracts
3
Q
If a group of onerous contracts is PAA eligible, what further adjustment to LRC is required?
A
- must add a “loss component”
* loss component = (LRC using GMA) – (LRC using PAA)
4
Q
Briefly explain the application of the thresholds…
in determining PAA eligibility
A
- Cov Period smaller or equal to 12m?
-> If satisfied => automatically eligible for PAA
-> If not satisfied => apply threshold #2 - Group revenue smaller or equal to 1% of total revenue?
-> If satisfied => eligible for PAA
-> If not satisfied => apply threshold #3 - (PAA - GMA) smaller or equal to group’s share of aggregate threshold
Group’s share = (Group revenue * Group LR)/Total * Aggregate Threshold
-> If satisfied => We can assume PAA & GMA do not materially differ and group is eligible for PAA
-> If not satisfied => not eligible for PAA