Components of TPs

Question 1

What should the components included in the TPs relate to?

Answer 1

1. Past and future events

2. Relating to business inforce at the reporting date

Question 2

What are some examples of provisions relating to past events?

Answer 2

1. Claims already reported
2. Future development on reported claims
3. Claims that have happened but have not been reported
4. Re-opened claims
5. Claims handling expenses
6. Profit commission due or sliding scale contingent commission

Question 3

What are some examples of provisions relating to future events stemming from business inforce as at the reporting date?

Answer 3

1. Future claim payments that may arise from unexpired risk on existing policies
2. Internal expenses incurred on policy admin and claims settlement
3. Cash back and other Loyalty provisions

Question 4

What is ULAE?

Answer 4

Relates to those expenses incurred in the settling of claims that are not directly attributable to an individual policy

Question 5

What are examples of ULAE?

Answer 5

Claims department costs and usually some portion of overhead costs

Question 6

What is ALAE?

Answer 6

Relates to expenses incurred that are directly attributable to an individual claim and are typically tracked as such

Question 7

What should be considered if a margin is also calculated as part of the technical provisions?

Answer 7

1. The purpose of the valuation
2. Prescribed legislation
3. Reserving policy

Question 8

Summarise the 14 components of technical provisions

Answer 8

1. Past and future events
2. Relating to business inforce
3. At the reporting date
4. Claims reported and dev on these claims
5. Claims not yet reported
6. re-opened claims
7. CHE
8. Commisions due
9. Future claims from unexpired risk
10. Expenses incurred in policy and claims admin
11. Cash back
12. ULAE
13. ALAE
14. Margins