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KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
costs under cost centers and cost units, on
constant monitoring of the movement of costs,
and on adopting appropriate measures in case of
unfavourable developments.
In property insurance a significant risk factor is
climate change, which increases the frequency
of extreme weather events (flooding, hail, etc).
For liability insurance, characterised by lengthy
procedures which can take several years for damage
- The risk that social circumstances will change
so as to have an adverse effect on the Group can
be classified under economic environment risk.
cases to be resolved, a significant risk factor is the
increase of legal actions, especially involving
non-material claims (coverage and amount).
Increase in the unemployment rate and reduction
of purchase power can cause more damage
in credit insurance, fewer insurance contracts
concluded, more cancellations of life and pension
insurance contracts. This group may also include
the risk of change in case-law when adjudicating
damage claims.
In the interest of managing insurance risk, the
Group has concluded reinsurance contracts whereby
it transfers a portion of this risk to the reinsuring.
Each financial year the management adopts a
planned reinsurance program which includes
calculations of all maximum own insurance shares
- Policyholder behavior risk - insurance fraud.
- Claims risk involves the risk that damages will be
higher than expected in number and/or amount,
and the risk of excessive portion of self-coverage
due to inadequate reinsurance coverage, especially
in cases of catastrophic events.
In life insurance contracts with coverage for the
event of death, the number and amount of damages
is most affected by epidemics, change in lifestyle
such as change in dietary habits, physical exercise
and smoking. For life insurance contracts where the
insured event is maturity, and for health insurance
contracts, the greatest risk factor is the advancement
of medicine and improvement of the population's
social status, along with increasing longevity.
by insurance category, as well as the maximum
coverage table and certain procedures, bases
and criteria for determining the largest possible
damage. The reinsurance program consists of
traditional proportional and nonproportional forms of
reinsurance coverage, and it also includes a contract
for natural disasters.
5.1.2. Frequency and amount of damages
Concentration of insurance risk can stem from a
single insurance contract or from a smaller number
of contracts covering low-probability events with
high damage potential, such as insurance for
earthquakes and other natural disasters.
In insurance for the event of death, the greatest
effects which can increase the frequency of damage
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