• PINS Part A3.7 PINS Part A3.7 Premium risk component

    Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

    • PINS A3.7 Guidance

      An insurer may be exposed to the risk that the cost of future claims in respect of general insurance business will exceed the cost implicit in the premiums being charged. The purpose of the premium risk component is to require an insurer to hold capital against this risk in accordance with the calculations set out in rule A3.7.1. The basic calculation model in rule A3.7.1 applies different factors to the premium in respect of each PINS category, based on the different perceived risk of variability associated with each.

      Amended by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.1 Application of pt A3.7

      This Part applies to general insurance business.

      Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

    • PINS A3.7.2 PINS A3.7.2 Premium risk component

      (1) An insurer's premium risk component is the sum of the amounts obtained by multiplying the insurer's net premium liability that falls within each PINS category by the percentage applicable to that liability under table A3.7.2.
      Amended by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Table A3.7.2 Percentage factor — premium risk component

        Item PINS Category Direct insurance % Reinsurance: proportional % Reinsurance: non-proportional %
        1 PINS category 1 16 18 21
        2 PINS category 2 13 15 18
        3 PINS category 3 16 18 21
        4 PINS category 4 21 23 26
        (2) In this rule:

        net premium liability means premium liability less any expected reinsurance and non-reinsurance recoveries in respect of that premium liability as at the solvency reference date.

        Note Premium liability is defined in r 8.6.7 and solvency reference date is defined in the glossary.
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.3 Insurer may apply for different percentages

      (1) The Regulatory Authority may, on application of an insurer conducting business in PINS category 1, give written consent to the use of percentages other than those in table A3.7.2 if the authority is satisfied that:
      (a) adequate mortality and morbidity information exists in respect of that business; and
      (b) the information provides a reasonable basis for reliance on actuarial principles.
      (2) The percentages that may be used must be those stated in the notice but may not be lower than:
      (a) 12% in the case of direct insurance and proportional reinsurance; and
      (b) 16% in the case of non-proportional reinsurance.
      Amended by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.4 Certain contracts not included

      (1) If an insurer underwrites contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer need not calculate a premium risk component in respect of those contracts.
      (2) For contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer must calculate a long-term insurance risk component.
      Amended by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.5 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.6 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.7 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.8 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.9 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS A3.7.10 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).