5Premiums and Claims

5                      Premiums and Claims

5.1 Subject to paragraph 5.2, insurance components of life insurance contract premiums are income and insurance components of life insurance contract claims are expenses and shall be recognised separately in the statement of comprehensive income.  Deposit components of life insurance contract premiums are not income and deposit components of life insurance contract claims are not expenses and shall be recognised as changes in life insurance liabilities.

5.2 For life insurance contracts where unbundling of the deposit component is prohibited under paragraph 2.3.3, premiums shall be recognised as income and claims shall be recognised as expenses.

5.2.1 A wide variety of products are offered by life insurers – risk or insurance products, investment products and numerous hybrids of these two products.  There will be hybrid products that fall within the scope of this Standard that have both deposit and insurance components.

5.2.2 Premiums may comprise amounts that give rise to:

(a) income that is earned by providing services, including the bearing of risks; and

(b) amounts that are akin to deposits and which qualify for recognition as liabilities.

5.2.3 Similarly, claims may comprise amounts that give rise to:

(a) expenses that are incurred in providing services, including the bearing of risks; and

(b) amounts that are akin to withdrawals from deposits and which qualify for recognition as reductions in liabilities.