Answers to the European Commission on the ... - Eiopa - Europa

undertaken in relation <strong>to</strong> <strong>the</strong> sufficiency of <strong>the</strong> premiums of <strong>the</strong> new
products launched in <strong>the</strong> year, with reference <strong>to</strong> <strong>the</strong> specific
characteristics of <strong>the</strong> product (in particular guarantees and options)
and make a statement on <strong>the</strong> suitability of <strong>the</strong> hypo<strong>the</strong>ses used (in
particular <strong>the</strong> interest rate, mortality tables, surrender rate and
management costs).
Suitability and sufficiency of technical provisions
A.44 The actuary should describe <strong>the</strong> provisions policy of <strong>the</strong> insurance
undertaking and should describe in detail all methodologies and
procedures used in order <strong>to</strong> enable him <strong>to</strong> examine compliance with
prevailing norms and verify <strong>the</strong> sufficiency of technical provisions.
A.45 The actuary should present and justify <strong>the</strong> methodologies considered
and <strong>the</strong> hypo<strong>the</strong>ses on which he based his analysis carried out and also
objectively identify <strong>the</strong> amounts of <strong>the</strong> various technical provisions
subject <strong>to</strong> certification. This should include <strong>the</strong> disclosure of <strong>the</strong> best
estimates and <strong>the</strong> risk margins, by presenting <strong>the</strong> values and <strong>the</strong>
methodologies used in a separate way.
A.46 When prevailing regulations require use of specific hypo<strong>the</strong>ses, and if in
<strong>the</strong> opinion of <strong>the</strong> actuary <strong>the</strong>se materially differ from those that, in
o<strong>the</strong>r circumstances, he would normally take in<strong>to</strong> consideration, he
should issue his opinion, providing due grounds and indicating <strong>the</strong>
implications of this consideration.
A.47 Whenever possible, and provided that this can be justified by <strong>the</strong>
materiality criteria, <strong>the</strong> analysis should be carried out by means of a
subdivision of <strong>the</strong> existing data in<strong>to</strong> homogeneous and stable classes,
obtained for example, by taking in<strong>to</strong> consideration <strong>the</strong> patterns of
claims occurrence, patterns of regularization and/or severity of claims.
A.48 The models considered in analysis of <strong>the</strong> claims provision should take
in<strong>to</strong> consideration <strong>the</strong> nature and specific characteristics of <strong>the</strong>
portfolio, available data, <strong>to</strong>ge<strong>the</strong>r with o<strong>the</strong>r fac<strong>to</strong>rs that should be
subject <strong>to</strong> suitable analysis, in particular:
• evolution of <strong>the</strong> pattern of payments;
• evolution of <strong>the</strong> frequency and severity of claims;
• experience of <strong>the</strong> insurance undertaking on incurred but not
reported claims;
• policy for <strong>the</strong> claims regularization, in particular in terms of <strong>the</strong>
speed of closure and reopening of proceedings;
• existence of significant reimbursement or salvage amounts;
• frequency and severity of major claims;
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