Document Detail

Title: CEOs of all Non-life Insurance Companies
Reference No.: IRDA/ACTL/CIR/MISC/153/07/2014
Date: 08/07/2014
Financial Condition Report for Non life Insurance Companies
 
 
 
 
 
 
 
 
 
 
 
 
Financial Condition Report (FCR) for General insurance companies
 
 
 
 
                                                                                             
 
 
 
 
 
 
 
 
 
 
 

Financial Condition Report
 
For the financial year ended: 31st March 20..___________
Of
(Name of the Non-Life Insurance Company)
By
(Name of the Appointed Actuary)
 
 
Section
Topic
Page no
  1.  
Details of the Insurer & Appointed Actuary
5
  1.  
Executive summary
6
  1.  
Business Projections
7
  1.  
Analysis of business growth
8
  1.  
Analysis of experience
9
  1.  
Adequacy of premium
11
  1.  
Adequacy of reserves
12
  1.  
Reinsurance
13
  1.  
Risk management
14
  1.  
Adequacy of capital
17
  1.  
Investment and Asset liability management
18
  1.  
Miscellaneous
19
  1.  
Current Financial Condition
20
  1.  
Future Financial Condition
21
  1.  
Advise on Actuarial Matters
22
  1.  
Comments of the Board of the insurer
23
 
Appointed Actuary’s certificate
24
 
Glossary
25
 
 
 
FCR Preparation
 
I. The Objectives:
 
The objective of Financial Condition Report is to investigate the entire general insurance business carried on by the insurer as on the date of valuation and to report the strengths and weaknesses in terms of the risk the insurers carry with respect to meeting solvency requirements, profitability, morbidity, liquidity, credit, expense, investment return, asset-liability mismatch, insurer’s future position, other risks-specific to the business etc.
 
This report shall specifically address:
 
     a.        The sensitivity of the future solvency position to potential changes in the economic environment, claims experience, pricing strategy and all other relevant factors, if any
 
     b.        Building of early warning signals to assess the financial condition
 
      c.        Comprehensive view on the company
 
 
II. Instructions:
 
 A.   The AA shall ensure the following:
 
a.    The Financial Condition Report along with the Board comments, duly signed by the CEO and the Appointed Actuary, shall be submitted to the Authority by the end of August of every financial year. Also the soft copy of the said report shall be sent to actuarial at irda dot gov dot in
 
b.    The soft copy shall include the Annexure in excel formats.
 
c.    The format and tables stipulated in this document shall be adhered to without any alternation. The fields which are not relevant shall not be left blank, but shall state “not applicable” or “NA”.
 
d.    The numbers provided in the FCR shall be:
 
                          i.          Reconciled with the financial statements of accounts and IBNR, wherever applicable.
 
                         ii.          Provide in unit of thousands
 
                       iii.          All outgo entries in the Annexure shall be shown in brackets ()
 
e.    The chronological order in the LOB table shall be strictly followed.
 
f.     Separate Tables shall be furnished for each Classification/ Combination of Classifications (wherever the classification is more than one).
 
g.    The soft copy of the Annual Report (Tables/Schedules in excel format) shall also be furnished to the Authority at actuarial at irda dot gov dot in 
B.        The Appointed Actuary (AA) shall provide detailed analysis along with the actions proposed, if any, on each section of the FCR.
 
C.        The AA shall also discuss the areas of concern under each section with specific emphasis on business operations inside/outside India (wherever applicable) and its impact on the insurer as a whole.
 
 

 
Section 1    :  Details of Insurer & Appointed Actuary
 
 
Sl.No.
Item
Current Year
Last Year
  1.  
Name of the Insurer
 
 
  1.  
Address with Phone/fax numbers ; website address, email
 
 
  1.  
Registration number issued by the IRDA
 
 
  1.  
Date of registration
 
 
  1.  
Date of commencement of operations
 
 
  1.  
Paid up Capital
 
 
  1.  
Net Worth
 
 
  1.  
Name of CEO
 
 
  1.  
Appointed Actuary Details
 
 
  1.  
Name
 
 
  1.  
Qualification
 
 
  1.  
Date of Birth
 
 
  1.  
Appointment with the insurer
 
 
  1.  
Appointment as AA
 
 
  1.  
Date of issue of latest COP from IAI
 
 
  1.  
Date of expiry of COP
 
 
 
 
    Signature of AA                                                   Signature of Principal Officer
 
           (Name)                                                                             (Name)
 
 
Section 2    : Executive summary
 
2.1      For each LOB, the AA shall provide the required data in Tables 2.1, 2.2 (a) & (b) & 2.3 of Annexure and discuss point-wise the following:
 
2.1.1        The key issues in relation to the factors that influence the performance of the company.
 
2.1.2        Overview of the financial condition of the company without omission of any material facts.
 
2.1.3        In detail the insights and recommendations provided to the insurer on the overall risk profile, the financial condition and the business profile of the company.
 
2.1.4        The strengths and weaknesses of the company and also highlight the areas of concern.
 
2.1.5        The reasons for any significant variation in the current key ratios with respect to  previous year’s ratios as well as current year expected values having regard to:
 
2.1.1.1      Line of business and inherent year to year variations in nature of business
 
2.1.1.2      Tail length of claims in each line of business
 
2.1.1.3      Seasonal variations and any CAT events common to the Industry
 
2.1.1.4      Company size and number of years since establishment
 
2.1.6        The remedial steps planned in case of adverse experience in key ratios compared to expected and last two years ratios.
 
2.2      The AA shall provide a detailed analysis of quantitative information, with regard to volume of business, underwriting, insurance profit, key ratios and business composition, provided in table 2.1, 2.2 (a) & (b) & 2.3 of Annexure.
 

 
Section 3    : Business Projections
 
3.1         The AA shall discuss the business philosophy separately for direct business and inward reinsurance business with respect to the expected business lines and the direction that the insurer intends to move in future with specific reference to the core functions of the company.
 
3.2         In addition to the above qualitative analysis, the AA shall provide quantitative information in table 3.1 given in Annexure, capturing line of business wise the actual to expected analysis of various key elements of the company.
 
3.3         AA shall discuss in detail the reasons for any significant variations between the actual and expected results furnished in table 3.1 of Annexure.
 
 
 
 
 
 
 

Section 4    : Analysis of business growth
 
4.1       For each LOB, the AA shall provide the required data in Tables 4.1 (a) & (b) of Annexure and comment explicitly on the following:
 
4.1.1    The business strategy adopted by the company
 
4.1.2    The new business written and renewal business (Customer Retention) of the company
 
4.1.3    Various key parameters that influence the business growth of the company including those given in table 4.1(b).
 
4.2       For the purpose of this report, renewal business is defined as follows:
 
4.2.1    The policies with term one year shall be treated as renewed in the second and subsequent years, if the policy is continued in the subsequent years without any gap i.e. customer is retained for the subsequent years
 
4.2.2    Single premium policies with term more than one year shall be treated as renewed from second year onwards till the end of the policy term provided the policy is continued with the insurer.
 
4.2.3    The policies with term more than one year with an option to pay the single premium in installments shall be shown as renewal business in second and subsequent years if the installment due is received as per the terms and conditions of the contract.
 
4.2.4    Regular premium policies with term more than one year shall be treated as renewed in subsequent years if the renewal premium is received as per the terms and conditions of the contract.
 

Section 5    : Analysis of Experience
 
5.1    Persistency Analysis :
 
5.1.1     For each LOB, the AA shall provide the required data in Table 5.1 of Annexure and discuss the renewal business/ renewal rate of the company, implementation of previous year’s initiatives and provide future initiatives planned in this regard. For the purpose of this report, renewal business is as defined in Section 4 (4.2) of this circular.
 
 
5.2    Free look Analysis :
 
5.2.1     AA shall furnish the quantitative information on free look cancellations in table 5.2 of Annexure and comment on the same.
 
 
5.3    Expense Analysis :
 
5.3.1     For each LOB, the AA shall provide the required data in Tables 5.3 (a) and 5.3 (b) of Annexure and discuss point-wise the following :
 
5.3.1.1      The methodology adopted for expense analysis in the entire financial planning of the Insurance Business.
 
5.3.1.2      The impact of Renewals on the total expenses
 
5.3.1.3      The method of allocation of expenses to different lines of business.
 
5.3.2     The AA shall discuss the reasons for any significant variation in the actual from expected expense ratio furnished in table 5.3 (b) along with the proposed course of action, if any.
 
5.4    Claims Analysis :
 
5.4.1     For each LOB, the AA shall provide the required data in Tables 5.4 (a), (b), (c) & (d)  of Annexure and discuss point-wise the following:
 
5.4.1.1      The impact of change in frequency & severity of reported and settled claims on the financial condition of the insurer
 
5.4.1.2      The impact of Large Claims on the financial condition of the insurer along with the specific definition used for the Large Claims.
 
5.4.1.3      The methodology followed to provide reserves as and when the claim is intimated and subsequent updation of reserves till the claim settlement
 
5.4.1.4      The impact of catastrophe claims on the financial condition of the insurer
 
5.4.1.5      The impact of recoveries from/to reinsurers on the financial condition of the insurer
 
5.4.1.6      The impact of salvage and subrogation on gross claims
 
5.4.1.7      The impact of closed and reopened claims on the financial condition of the insurer
 
5.4.1.8      The impact of any new or latent claims, that has emerged in the current financial year, on the financial condition of the insurer
 
5.4.1.9      The impact of any court awards setting precedence in claims settlements on the financial condition of the insurer
 
5.4.1.10   The impact of any other relevant factors that have affected the financial condition of the insurer
 
5.4.1.11   The changes (if any) in the claim processing procedure and its impact on the financial condition of the insurer.
 
5.4.1.12   The changes (if any) in the underwriting processes or guidelines and its impact on the financial condition of the insurer.
 
5.4.2     AA shall explicitly comment on the quantitative information furnished in table 5.4 (a), (b), (c) & (d) of Annexure
 
 
 
 
               
 
 
 

 
Section 6    : Adequacy of premium
 
6.1       For each LOB, the AA shall provide the required data in Tables 6.1, 6.2 & 6.3 of Annexure and discuss point-wise the following:
 
6.1.1       The pricing strategy/ methodology adopted
 
6.1.2       The effect of large claims and catastrophe claims on the pricing strategy
 
6.1.3       The profit testing procedure adopted.
 
6.1.4       The effect of inflation on pricing
 
6.1.5       The effect of various major risks on pricing
 
6.1.6       The effect of reinsurance arrangements on pricing
 
6.1.7       The effect of court awards on pricing
 
6.1.8       How the Pricing is addressed considering the premium deficiencies (if any) and the respective PDR’s as given in table 6.1.
 
6.1.9       How the financial condition of the company is impacted due to high discounts offered on the base premiums (as per F&U approval).
 
6.1.10    The reasons for producing underwriting loss (if any).
 
6.1.11    The impact of underwriting loss (if any) on the financial condition of the company.
 
6.1.12    The steps initiated to minimize the underwriting loss (if any)
 
6.1.13    The impact of underwriting loss (if any) on pricing
 
6.1.14    The steps initiated to minimize the loss ratios furnished in table 6.3.
 
6.1.15    The impact of loss ratios (if any) on pricing
 
6.1.16    The effect of any other relevant factors on pricing
 
6.1.17    Details of any rating analysis performed. If no such study has been done, the reason thereof shall be mentioned and a plan for the next round of study shall be mentioned
 
6.2       AA shall provide a detailed analysis on the quantitative information furnished in table 6.1, 6.2 & 6.3 of Annexure
Section 7    : Adequacy of Reserves
 
7.1           For each LOB, the AA shall provide the required data in Tables 7.1, 7.2 & 7.3 of Annexure and discuss point-wise the following:
 
7.1.1           The detailed methodology followed in estimation of reserves specifying whether point-estimates or stochastic or any other models are used in estimation of reserves in respect of the following:
 
7.1.1.1       Direct insurance business for short tailed and long tailed
 
7.1.1.2       Reinsurance/coinsurance accepted business separately
 
7.1.1.3       Catastrophes and large claims
 
7.1.2           In case of stochastic reserving, the percentile at which the final reserve is estimated shall be provided along with the rationale
 
7.1.3           The data and system constraints in respect of direct insurance business, reinsurance/coinsurance accepted/ceded business separately.
 
7.1.4           The methodology adopted to review the adequacy of premium rates and the setting up of suitable reserves, if inadequate.
 
7.1.5           Any other relevant factors that have a significant impact on the estimation of reserves.
 
7.1.6           The methodology followed in monitoring the actual loss development with expected loss development and the proposed action (if any)
 
7.2           The AA shall provide a detailed analysis of quantitative information furnished in table 7.1, 7.2 & 7.3 of Annexure
 
 
 
 
 
 

 
Section 8    : Reinsurance
 
8.1      For each LOB, the AA shall provide the required data in Tables 8.1, 8.2, 8.3 & 8.4 of Annexure and discuss point-wise the following:
 
8.1.1        The Company’s Reinsurance, Coinsurance and Inward/Outward Reinsurance Philosophy
 
8.1.2        The facultative reinsurance arrangements for Outward and Inward of the company.
 
8.1.3        The multilateral reinsurance arrangements (such as declined pool) of the company.
 
8.1.4        The process of reinsurance renewals
 
8.1.5        The reinsurance disputes, if any.
 
8.1.6        The methodology followed in arriving at maximum retention of the company.
 
8.1.7        Availability of relevant re-insurance capacities
 
8.2      The AA shall provide a detailed analysis of quantitative information furnished in table 8.1, 8.2, 8.3 & 8.4 of Annexure
 
 

 
Section 9    : Risk Management
 
The AA shall detail for each LOB the assessment and management of Risk in terms of identification, estimation and management of significant risks specific to the insurer.
 
9.1      Company overview
The AA shall discuss the following point-wise:
9.1.1             The material lines of business written
9.1.2             Key risks
9.1.3             Risk mitigation in place
9.1.4           Risk concentration: Region wise, product wise, line of business wise, business allocation wise etc.,( distribution channel wise )
9.1.5           Key trends or factors that have or may have a significant impact on the financial condition of the company.
9.1.6           The impact arising out of discounts, pricing competition, under reserving, catastrophes, business volumes.
 
9.2      Risk management system :
The AA shall discuss the following point-wise:
9.2.1             Risk strategy
9.2.2             Risk management roles and responsibilities
9.2.3             Risk monitoring procedures adopted
9.2.4            Approaches/tools used to identify and assess risks, including details of key risk indicators and metrics used
9.2.5             Approach adopted to identify emerging risks
9.2.6             The existing internal controls
9.2.7              The review process and feedback loop
9.2.8              Any risks that are not considered within the company’s risk management system, along with the reasons as to why they are not included.
9.2.9              The appropriateness of the risk management system, given the nature, scale and complexity of the business.
 
9.3     Risk exposure
The AA shall discuss the following point-wise:
9.3.1              Nature and extent of the risk exposure, and how this has developed 
9.3.2              Products and investments that give rise to risk, including for investment risk, details of the investment strategy
9.3.3              Qualitative and quantitative measures used to assess the risk
9.3.4              The level of risk the company is prepared to take, or the company’s tolerance for the risk
9.3.5              Controls in place to manage the level of risk
9.3.6              Whether the current level of risk is at an acceptable level
9.3.7              How experience compares with pricing assumptions
 

 
9.4      Mitigation :
The AA shall discuss the following point-wise:
9.4.1              Appropriateness of reinsurance and other risk mitigation tools in place to reduce risk exposures.
9.4.2              Details of any risk mitigation tools currently in place and the processes for monitoring their effectiveness.
9.4.3              Risk mitigation methodologies used.
 
9.5      Sensitivity :
 
9.1.1     For each LOB, the AA shall provide the required data in Tables 9.1 of Annexure and discuss point-wise the following:
 
9.5.1.1         The sensitivity of the business to the key risk exposures
9.5.1.2         The methods and assumptions used to assess the sensitivities.
9.5.1.3         The sensitivity of the risks that have a significant impact on the solvency of the company
9.1.2     The AA shall define explicitly the base & the pessimistic scenarios assumed in arriving at the projections given in table 9.1 of Annexure.

Section 10:   Capital Adequacy
 
10.1         For each LOB, the AA shall provide the required data in Tables 10.1 & 10.2 of Annexure and discuss point-wise the following:
 
10.1.1        The current and future capital adequacy of the company
 
10.1.2        The company’s perspective on capital management
 
10.1.3        The scenario testing being done
 
10.1.4        The impact of business plans on the capital requirement of the company.
 
10.2         The AA shall provide detailed analysis of quantitative information, with regard to business level solvency margins and business plans for the current year, furnished in table 10.1 & 10.2 of Annexure.
 
 

 
Section 11: Investments and Asset Liability Management
 
11.1         For each LOB, the AA shall provide the required data in Tables 11.1 of Annexure and discuss point-wise the following with respect to the insurer’s liability profile and liquidity needs:
11.1.1        The insurer’s investment strategy
 
11.1.2        The methodology of asset liability management of the company
 
11.1.3        The areas of concern in asset liability management
 
11.1.4        The investment philosophy of the company including the mix and quality of investment assets
 
11.1.5        The changes (if any) in the asset allocation, investment strategy etc based on the ALM analysis
 
11.1.6        Whether assets and liabilities are matched and if not, reasons and implications on financial condition of the company.
 
11.1.7        The impact of various significant risks on the investments of the company
 
11.1.8        The impact of various risks on asset liability management of the company
 
11.2         The AA shall provide detailed analysis of quantitative information, with regard to assets and liabilities of the company, furnished in table 11.1 of Annexure

Section 12:  Miscellaneous
 
12.1      AA shall furnish the number of complaints received by the company under various heads in table 12.1 (a), (b) & (c) of Annexure and shall
 
12.1.1           Provide a detailed analysis of various complaints along with the intensity of complaints and the time taken by the company to settle them.
 
12.1.2           Discuss the impact of these complaints on the financial condition of the company
 
12.1.3           Discuss the steps initiated by the company to reduce the complaints
 
12.1.4           Discuss the steps initiated to reduce the time taken by the company to resolve the complaints
 
 

 
Section 13: Current Financial Condition
 
13.1         For each LOB, the AA shall provide the required data in Tables 13.1 & 13.2 of Annexure and shall discuss point-wise the following:
 
13.1.1           The current financial condition of the Company with specific focus on each of the previous sections of this report.
 
13.1.2           The financial condition of the company based on his understanding of the business and adequacy of reserves.
 
13.1.3           The solvency position of the company
 
13.1.4           Quarterly solvency ratios, premium & expense details of the company furnished in table 13.1 & 13.2 of Annexure.
 
13.1.5           The adequacy of premium
 
13.1.6           The changes (if any) in reserving methodology from the previous years, and explain reasons for such changes.
 
13.1.7           The impact of change in reserving methodology on the financial condition of the insurer.
 
13.2         The AA shall provide insights into profitability (i.e surplus / deficit) of the company including trends based on previous years and the company’s future plans.
 
 

 
Section 14:  Future Financial Condition
 
14.1         For each LOB, the AA shall provide the required data in Tables 14.1 & 14.2 of Annexure and shall discuss point-wise the following:
 
14.1.1           In detail the future financial condition of the company.
 
14.1.2           The company’s projected financial statements and solvency position for next three years, allowing for expected future new business furnished in table 14.1 of Annexure.
 
14.1.3           The results of stress tests for two plausible adverse scenarios (i.e. events that could have a negative impact on solvency position) furnished in table 14.2 of Annexure. Two adverse scenarios must be selected by the company as felt appropriate for the company’s business based on judgment of the likelihood of events or combination of events in each of the 2 scenarios that could have a negative impact on solvency position of the company.
 
14.1.4           Briefly the proposed management actions to ensure maintenance of regulatory solvency even under the adverse conditions
 
 
14.2         AA shall define explicitly the two plausible adverse scenarios assumed in stress testing.
 
 
  
 

 
Section 15: Advise on Actuarial Matters
 
15.1         The AA shall provide the details of meetings attended vis-a vis conducted in accordance with Regulation (7) of IRDA (Appointed Actuary) Regulations, 2000. If any of the meetings are not attended to, the reasons thereof.
 
15.2         The AA shall discuss the details of the advice provided to the management in accordance with Regulation (8) of IRDA (Appointed Actuary) Regulations, 2000 and any other relevant matter along with course of action/proposed course of action.
 
 
 
 
 
 
 
 
 
 
 

 
Section 16: Comments of the Board of the Insurer
 
      16.1          On each of the chapters above, the insurer shall provide the comments of the Board and proposed course of action, if any.

 
Appointed Actuary’s Certificate
 
 
This is to certify that I have considered the data and information provided by the Company in the preparation of this Financial Condition Report. Reasonable steps have been taken to ensure the accuracy and completeness of the data.
 
 
 
 
(Appointed Actuary)                                                                        
 
Countersigned by:    (MD / CEO)
 
 
Company Seal:
Date:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Glossary
 
1.            Average Gross premium : Gross premium / number of exposures
2.            Average net premium : Net premium / Number of exposures
3.            Average Sum insured : Total sum insured / Number of exposures
4.            Allocated loss adjustment expenses: correspond to those costs that the insurer is able to assign to a particular claim.
5.            Annualized Premium: (For the purpose of this report) it is defined as
a)        For Regular Premium policies : Regular premium amount payable in a year
b)        For Single premium policies : Single premium amount / term of the policy
6.            Combined ratio : Net commission ratio + expense ratio + Net incurred claim ratio
7.            Claim Frequency : Number of incurred claims / Number of exposures
8.            Claim Severity : Gross (net)Incurred claim amount / Number of Incurred claims
9.            Closed claim without claim payment (number):   Includes all the claims that are closed without claim payment.
10.         Closed claim without claim payment (amount) :    (For the purpose of this report) includes claim amount of all the claims closed without claim payment exclusive of allocated loss adjusted expenses and these expenses should be included in the claims closed with payment (amount).
11.         Closed claim with claim payment (number): Includes all the claims that are closed with claim payment.
12.         Closed claim with claim payment (amount):  (For the purpose of this report) includes claim amount of all the claims closed with payment inclusive of allocated loss adjusted expenses of both claims closed with & without payment.
 
13.         Expense Ratio : Operating expenses / Gross written premium
14.         Exposures : An exposure is the basic unit of risk that underlies the insurance premium
15.         Insurance profit  : Underwriting profit + Investment income on insurance funds
16.         Gross Earned Premium (GEP) : Premium from direct business written + Premium on reinsurance accepted +/-Adjustment for change in reserve for unexpired risk (Definition as per annual report)
17.         Gross premium : Premium from direct business written + Premium on reinsurance accepted
18.         Gross claims paid : Claim amount paid on direct business written + Claim amount paid on reinsurance accepted business
19.         Gross Incurred claim : Claim amount paid (gross) + Claims outstanding (Inclusive of IBNR) amount at the end of the Financial Year (gross) – Claims outstanding (Inclusive of IBNR) amount at the beginning of the Financial Year (gross) (Definition as per annual report)
20.         Gross Incurred Loss Ratio : Gross incurred claim / Gross earned premium
21.         Gross claims Paid Loss Ratio : Gross claims paid / Gross earned premium
22.         Gross commission: Commission paid on direct written business + Commission paid on reinsurance accepted business.
23.         Net Earned Premium (NEP) : Premium from direct business written + Premium on reinsurance accepted – Premium on reinsurance ceded +/-Adjustment for change in reserve for unexpired risk (Definition as per annual report)
24.         Net premium : Premium from direct business written + Premium on reinsurance accepted – Premium on reinsurance ceded (Definition as per annual report)
25.         Net claims paid : Claim amount paid on direct business written + Claim amount paid on reinsurance accepted business –Claim amount received from ceded business
26.         Net Incurred claim : Claim amount paid (net) + Claims outstanding (Inclusive of IBNR) amount at the end of the Financial Year (net) – Claims outstanding (Inclusive of IBNR) amount at the beginning of the Financial Year (net) (Definition as per annual report)
27.         Net Commission : Commission paid with respect to direct business + Commission paid with respect to Reinsurance accepted – Commission received with respect to Reinsurance ceded (Definition as per annual report)
28.         Net Incurred Loss Ratio : Net Incurred claim / Net earned premium
29.         Net claims paid loss ratio : Net claims paid / Net earned premium
30.         Net Commission ratio : Net commission / Net Premium
31.         Number of Incurred claims : Number of settled claims (i.e. claims are closed with / without payment) + open claims
32.         Operating expenses : As per Schedule 4 of the Annual Report
33.         Premium deficiency reserve: Premium deficiency shall be recognized if the sum of expected claim costs, related expenses and maintenance costs exceeds related reserve for unearned premium reserve.
34.         Retention ratio : Net Written Premium/ Gross Written Premium
35.         Renewal Business : Refer Section 4 (4.2) of FCR document
36.         Salvage and subrogation: Salvage represents any amount that the insurer is able to collect from the sale of damaged property. Subrogation refers to an insurer’s right to recover the amount of claim payment to a covered insured from a third-party responsible for the injury or damage
37.         Solvency ratio : ASM / RSM (as per Regulations)
38.         Tail length : Estimated time taken for settlement of claim from the date of loss occurrence
39.         Underwriting profit : Net earned premium – Net incurred claims+/-Net Commission-Operating expenses
40.         Unallocated loss adjustment expenses: are the claim related expenses but cannot be allocated to a specific claim. Examples of ULAE include salaries, rent, and computer expenses for the claims department of an insurer.
41.         Unearned Premium Reserve (UPR): A reserve for unexpired risks shall be created as the amount representing that part of the premium written which is attributable to, and to be allocated to the succeeding accounting periods and shall not be less than
·       Fire business, 50 per cent,
·       Miscellaneous business, 50 per cent,
·       Marine business other than marine hull business, 50 per cent; And
·       Marine hull business, 100 per cent,
          Of the premium, net of re-insurances, during the preceding twelve months;
 
 
 
 

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