Technical provisions are formed to ensure that insurance companies can cover their obligations to policyholders arising through insurance coverage. The requirements defined in this Circular relate to the reinsurance business and are directed at all insurance companies active in this business. It defines minimum requirements to ensure that insurance companies have a sufficient level of technical provisions from an actuarial viewpoint. The consultation ends on 15 September 2010.
Technical provisions are formed to ensure that insurance companies can cover their obligations to policyholders arising through insurance coverage. Technical provisions represent the largest share of an insurance company's liabilities. An insufficient level of provisions can impact heavily on a company's solvency. The requirements involved in determining technical provisions as set out in this Circular are of major importance in protecting insured parties against the risk of insurance companies becoming insolvent.
The requirements defined in this Circular relate to the reinsurance business and are directed at all insurance companies active in this business.
Currently there are no special regulations on determining technical provisions for the reinsurance business. The basis for regulating technical provisions was put in place with the Insurance Supervision Act (ISA; SR 961.01) and the Insurance Supervision Ordinance (ISO; SR 961.11), both of which entered into force on 1 January 2006. This Circular aims at setting down the provisions in the laws and ordinances and prescribes minimum requirements to ensure that insurance companies have a sufficient level of technical provisions from an actuarial viewpoint. It deals with the evaluation, documentation, information, processing and controlling principles of technical provisions. The Circular follows a principle-based approach. Particular emphasis is therefore placed on the documentation and information requirements for the calculation of technical provisions. Models, methods and assumptions must be clearly documented and justified. The analysis of whether technical provisions are sufficient must be documented by the actuary responsible.
This Circular sets down requirements on determining technical provisions that are in line with current international practice.
The consultation ends on 15 September 2010.
Contact
Alain Bichsel, Head of Communications, Phone +41 (0)31 327 91 70, alain.bichsel@finma.ch
