Stressed policy liabilitiesStressed policy liabilities

Stressed policy liabilities

13. The stressed policy liabilities for non-participating benefits must be determined in the same way as the risk-free best estimate liability (RFBEL), but using ‘stressed assumptions’ instead of best estimate assumptions in respect of mortality, morbidity, longevity, lapses, servicing expenses and any other insurance risks such as take-up rates for non-financial options.
14. The stressed policy liabilities for participating benefits must be determined in the same way as the participating policy liability (PPL), but using stressed assumptions instead of best estimate assumptions in respect of mortality, morbidity, longevity, lapses, servicing expenses and any other insurance contingencies such as take-up rates for non-financial options.
15. Stressed assumptions must be used in determining the stressed policy liabilities for existing claims which have not yet been finalised, claims that have been incurred but not reported, and claims that are expected to be incurred in future.



16. The stressed policy liabilities must provide for adjusted policy liabilities (calculated using the stressed assumptions) to be funded 12 months from the reporting date for those policies that are projected to remain in force at that date. This test must be applied separately for the following groups:
(a) non-participating benefits without entitlement to discretionary additions;
(b) non-participating benefits with entitlement to discretionary additions; and
(c) participating benefits.

The stressed policy liabilities must be determined at sub-group level if the policy benefits for a sub-group of policies are determined by reference to the performance of particular assets that the life company has allocated to the liabilities for that sub-group.