CTHRepealedLegislation
Life Insurance (prudential standard) determination No. 5 of 2012
Insurance Risk ChargeInsurance Risk Charge
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Insurance Risk Charge
8. This Prudential Standard sets out the method for calculating the Insurance Risk Charge.
9. The Insurance Risk Charge for a statutory fund provides a buffer against the risks of adverse experience or changes to best estimate assumptions with regards to:
(a) mortality;
(b) morbidity;
(c) longevity;
(d) lapses;
(e) servicing expenses; and
(f) other insurance risks such as option take-up rates.
10. The Insurance Risk Charge for a statutory fund is the reduction, if any, in the capital base that would occur if the adjusted policy liabilities were changed to an amount equal to the stressed policy liabilities determined under this Prudential Standard.
11. The Insurance Risk Charge for the general fund of a friendly society is the servicing expense reserve as defined in paragraphs 52 to 55.
12. There is no Insurance Risk Charge for the general fund of a life company other than a friendly society.