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

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2
Q

Identify 2 ways to determine if LRC using PAA differs materially from LRC using GMA.

A
  1. Quantitative assessment:
    • calculate LRC using PAA & GMA and verify the difference is ≤ materiality threshold
  2. Qualitative assessment:
    • assess a similar group of contracts
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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)

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4
Q

Briefly explain the application of the thresholds…

in determining PAA eligibility

A
  1. Cov Period smaller or equal to 12m?
    -> If satisfied => automatically eligible for PAA
    -> If not satisfied => apply threshold #2
  2. Group revenue smaller or equal to 1% of total revenue?
    -> If satisfied => eligible for PAA
    -> If not satisfied => apply threshold #3
  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
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