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Life Insurance (prudential standard) determination No. 5 of 2012
Random stresses for mortality and morbidRandom stresses for mortality and morbidity
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Random stresses for mortality and morbidity
32. The ‘random stress’ margins, before the adjustment for diversification, must be determined by the Appointed Actuary, having regard to the nature of the mortality and morbidity risks to which the company is exposed. The margins for random stresses must be applied for 12 months from the reporting date. Each random stress must reflect the uncertainty arising due to adverse fluctuations in experience, but excluding the impact of single events such as pandemics, terrorist attacks and natural catastrophes that could cause large numbers of claims. The size of these margins will depend on factors such as the number of expected claims, the distribution of sums insured, and the impact of existing reinsurance arrangements.