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RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of January 31, 2019 No. 13

About approval of Requirements to forming, method of calculation of insurance reserves and their structure

(as amended on 26-01-2021)

According to the laws of the Republic of Kazakhstan of December 18, 2000 "About insurance activity" and of March 19, 2010 "About the state statistics" the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Requirements to forming, method of calculation of insurance reserves and their structure (further - Requirements).

2. Recognize invalid:

1) the resolution of Board of National Bank of the Republic of Kazakhstan of May 6, 2014 No. 76 "About approval of Requirements to forming, method of calculation of insurance reserves and their structure (it is registered in the Register of state registration of regulatory legal acts at No. 9529, it is published on July 2, 2014 in information system of law of Ad_let);

2) Item 22 of the List of regulatory legal acts of the Republic of Kazakhstan concerning regulation of insurance activity to which changes are made the Board of National Bank of the Republic of Kazakhstan approved by the resolution of May 30, 2016 No. 127 "About modification of some regulatory legal acts of the Republic of Kazakhstan concerning regulation of insurance activity" (it is registered in the Register of state registration of regulatory legal acts at No. 14277, it is published on October 24, 2016 in information system of law of Ad_let).

3. To department of regulation of the non-bank financial organizations (Kosherbayeva A. M.) in the procedure established by the legislation of the Republic of Kazakhstan to provide:

1) together with Legal department (Sarsenov N. V.) state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan;

2) within ten calendar days from the date of state registration of this resolution of its direction in the Kazakh and Russian languages in the Republican state company on the right of economic maintaining "The republican center of legal information" for official publication and inclusion in Reference control bank of regulatory legal acts of the Republic of Kazakhstan;

3) placement of this resolution on official Internet resource of National Bank of the Republic of Kazakhstan after its official publication;

4) within ten working days after state registration of this resolution submission to Legal department of data on execution of the actions provided by subitems 2), 3) of this Item and item 4 of this resolution.

4. To management on consumer protection of financial services and external communications (Terentyev A. L.) provide within ten calendar days after state registration of this resolution the direction it to the copy on official publication in periodic printing editions.

5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Republic of Kazakhstan Kurmanov Zh. B.

6. This resolution becomes effective after ten calendar days after day of its first official publication.

Chairman of National Bank

D. Akishev

It is approved

Committee according to the statistics Ministries of national economy of the Republic of Kazakhstan

_____________________

"___" _____________ 2019

 

Approved by the Resolution of Board of National Bank of the Republic of Kazakhstan of January 31, 2019 No. 13

Requirements to forming, method of calculation of insurance reserves and their structure

Chapter 1. General provisions

1. These Requirements to forming, method of calculation of insurance reserves and their structure (further - Requirements) are developed according to the Law of the Republic of Kazakhstan of December 18, 2000 "About insurance activity" (further - the Law) and establish requirements to forming, method of calculation of insurance reserves and their structure on obligatory and voluntary classes of insurance of industry "general insurance" and industries "life insurance".

Requirements extend to the insurance (reinsurance) organizations, including the Islamic insurance (reinsurance) organizations, branches of the insurance nonresident organizations of the Republic of Kazakhstan and branches of the Islamic insurance nonresident organizations of the Republic of Kazakhstan.

2. For the purposes of Requirements the following concepts are used:

1) actuarial methods - the economic-mathematical methods of calculations applied by the actuary when calculating insurance reserves;

2) catastrophic risk - risk of loss or adverse change in value of insurance bonds as a result of considerable uncertainty of the assumptions used when pricing and forming reserves concerning extreme and exclusive events;

3) the predicted payments - the obligations of the insurance (reinsurance) organization connected with prolongation (re-examination) of extent of loss of professional working capacity (further - degree of UPT) the beneficiary or indemnification to persons which suffered damage as a result of the death of the worker according to Article 940 of the Civil code of the Republic of Kazakhstan (Special part) of July 1, 1999 (further - the Civil code);

4) settlement date - date for which calculation of insurance reserves is made;

5) the minimum deposit award (deposit award) - amount of money which is subject to payment of the insurance (reinsurance) organization according to the insurance contract (reinsurance) which conditions provide their irrevocability;

6) not earned insurance premium - the part of insurance premium relating to the period of action of insurance protection which remained for settlement date according to the insurance contract (reinsurance);

7) indexation rate - the rate increasing the amount of insurance payment;

8) the specified expected cost - the expected (probable) cost of insurance premiums (insurance premiums) either insurance payments, or expenses calculated (discounted) taking into account interest rate and period of time between settlement date and receipt date of insurance premium (fees) or date of implementation of insurance payment for the insurance contract (reinsurance) with use of the tables containing probabilities of approach of death, disability, disease and the sizes connected with the forthcoming life expectancy of persons calculated on their basis (further - life tables, incidences, disability);

9) the suffered losses - the amount of effected payments and the declared, but not settled losses of the insurance (reinsurance) organization;

10) the declared, but not settled loss - the requirement to the insurance (reinsurance) organization about approach of insurance event and (or) insured event and (or) about implementation of insurance payment, declared by the insurer (insured, the beneficiary) in writing, or according to the procedure, provided by the laws of the Republic of Kazakhstan on obligatory types of insurance and (or) the insurance contract (reinsurance) on which insurance payment was not performed or performed not in full;

11) net - award (net - fees in case of payment by installments) - amount of money which is subject to payment of the insurance (reinsurance) organization for adoption of obligations by it only on implementation of insurance payments without covering of other expenses of the insurance (reinsurance) organization;

12) reserve basis - set of the parameter values influencing the size of insurance reserves according to life insurance contracts and annuity insurance;

13) expenses on settlement of insurance losses - amount of money, necessary for the insurance (reinsurance) organization for payment of the expert, consulting or other services connected with assessment of the size and decrease in damage (harm) caused to valuable interests of the insurer, which arose in connection with insured events;

14) insurance event - the event having probability in subsequent to be acknowledged insured event according to the laws of the Republic of Kazakhstan on obligatory types of insurance and (or) the insurance contract (reinsurance);

15) insurance reserves - the obligations of the insurance (reinsurance) organization according to insurance contracts (reinsurance) estimated on the basis of actuarial calculations according to Requirements;

16) the overcautious person's share in insurance reserves - part of obligations of the overcautious person according to the insurance contract (reinsurance) for settlement date;

17) insurance premium - the insurance premium according to the insurance contract (reinsurance) recognized in financial accounting as the income;

18) net insurance premium - insurance premium without the overcautious person's share;

19) tariff basis - set of the parameter values influencing the size of insurance rates according to life insurance contracts and annuity insurance.

Chapter 2. Requirements to information necessary for calculation of insurance reserves

3. Insurance reserves are created by the insurance (reinsurance) organization separately according to each insurance contract (reinsurance) and (or) on each class of insurance, and (or) on the loss everyone declared, but not settled, depending on type of insurance reserve, stipulated in Item 5 Requirements. Calculation of insurance reserves is made taking into account amount of obligations assumed by the insurance (reinsurance) organization on all to the signed insurance contracts (reinsurance) regardless of the subsequent risks reinsurance.

The actuary perfroms calculation of insurance reserves on the basis of information containing in the reporting of the insurance (reinsurance) organization, and other information.

4. The actuary no later than 10 (tenth) working days of the month following reporting quarter constitutes in time on paper in any form reasons by calculation of insurance reserves which are signed by the actuary and are stored in insurance company.

Reasons by calculation of insurance reserves contain:

parameters of reserve basis with appendix of reasons in each parameter;

reasons at the choice of method of calculation of reserve occurred, but the unclaimed losses and reserve which occurred, but still the unclaimed losses, with statement of information on quantity considered in calculation of the periods of approach of losses, frequency of losses, to the choice of coefficient of development of losses, smoothing of severe losses, additional obligations and calculation of correction coefficient according to Item 16 of Requirements;

reasons on the amounts of the expected expenses connected with consideration and settlement of the amount of insurance payments for the declared requirements;

reasons on adjustment of the loss considered in calculation of average (average market) value of the paid claims according to Item 22 of Requirements (in case of their availability in the accounting period);

reasons and calculation of the amount of the obligations of the insurance (reinsurance) organization connected with origin for settlement date of additional risks according to the signed insurance contracts (reinsurance), the insurance reserves which are not provided when forming;

results of the carried-out test for adequacy of reserves of losses, including the retrospective analysis on the basis of data for the last 12 (twelve) months, separately on each class of insurance and on the insurance portfolio in general;

conclusions about sufficiency (insufficiency) of insurance reserves and in case of insufficiency of insurance reserves, the analysis of the reasons of insufficiency;

when forming share of the overcautious person in insurance reserves under the agreements of reinsurance providing transfer more than 80 (eighty) percent of insurance premiums - the conclusion of division of reinsurance about availability of confirmation of the overcautious person (overcautious persons), the stipulated in Item 53 Requirements signed by the leading employee of the insurance (reinsurance) organization into whose power monitoring of questions of division of reinsurance is included;

other assumptions and assumptions used by the actuary when calculating insurance reserves and the overcautious person's shares in insurance reserves, and the data necessary for specifying in reasons according to the actuary.

Chapter 3. Structure of insurance reserves

5. The insurance reserves obligatory for forming by the insurance (reinsurance) organization, include:

1) reserve of not earned premiums (further - RNP) - the part of insurance premium (fees) according to the insurance contract (reinsurance) relating to the period of action of insurance protection which remained for settlement date (not earned premium), intended for obligation fulfillment on ensuring the forthcoming payments in case of their origin in the next accounting periods;

2) reserve of not occurred losses (further - RNU) - obligations of the insurance (reinsurance) organization on implementation of insurance payments for insured events which did not occur for settlement date;

3) reserves of losses:

reserve occurred, but unclaimed losses (further - the Russian Party of People's Administration) - assessment of obligations of the insurance (reinsurance) organization on implementation of insurance payments, including expenses on settlement of the losses which arose in connection with the insured events which occurred in reporting or the periods preceding it which approach fact in the procedure determined by the law of the Republic of Kazakhstan or the agreement it is not told the insurance (reinsurance) organization in reporting or the periods preceding it;

reserve of the declared, but not settled losses (further - RZNU) - assessment of the unexecuted or fulfilled not completely on reporting date obligations of the insurance (reinsurance) organization on implementation of insurance payments, including expenses on settlement of losses.

6. Final values of insurance reserves, according to the insurance contract when calculating RNP, RNU, RZNU and when calculating the Russian Party of People's Administration for insurance class, having negative value, accept value zero.

Chapter 4. Calculation of insurance reserves for industry "general insurance"

7. Calculation of RNP is made separately according to each insurance contract.

8. For calculation of size RNP the proportion method is used.

9. RNP is determined by method of proportion by summing of the not earned premiums calculated under each agreement.

Not earned premium is determined by method of proportion by each agreement as the work of insurance premium under the contract for the relation of effective period of insurance protection, unexpired on reporting date (in days) to effective period of insurance protection (in days) from the date of recognition of insurance premium in financial accounting as the income until the end of action of insurance protection:

5-21 11

The joint venture - insurance premium;

T1 - the number of days during which insurance protection from the date of recognition of insurance premium in financial accounting as the income until the end of action of insurance protection according to the insurance contract (reinsurance) is effective;

T2 - the number of the days of action of insurance protection which expired from the moment of recognition of insurance premium in financial accounting as the income before settlement date (inclusive).

When calculating prudential standard rates according to the resolution of Board of National Bank of the Republic of Kazakhstan of December 26, 2016 No. 304 "About establishment of normative values and techniques of calculations of prudential standard rates of the insurance (reinsurance) organization and insurance group and other regulations and limits, requirements, obligatory to observance, to the shares acquired by the insurance (reinsurance) organizations, the affiliated organizations of the insurance (reinsurance) organizations or insurance holdings (to shares in the authorized capital) legal entities, the list of bonds of the international financial institutions acquired by insurance holdings, the minimum required rating for the bonds acquired by insurance holdings and the list of rating agencies, and also the list of the financial instruments (except for shares and shares in the authorized capital) acquired by the insurance (reinsurance) organizations" registered in the Register of state registration of regulatory legal acts at No. 14794 (further - the resolution No. 304) both normative values and technique of calculations of prudential standard rates of branch of the insurance (reinsurance) nonresident organization of the Republic of Kazakhstan, branch of the Islamic insurance (reinsurance) nonresident organization of the Republic of Kazakhstan and other regulations and limits, obligatory to observance, including the procedure for forming of assets of branch of the insurance (reinsurance) nonresident organization of the Republic of Kazakhstan, the branch of the Islamic insurance (reinsurance) nonresident organization of the Republic of Kazakhstan accepted as reserve, and their minimum size (further - Standard rates) established according to Item 12 of article 46 of the Law calculation of RNP for the agreement of compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it is perfromed proceeding from the size of the insurance premium calculated according to article 17 of the Law of the Republic of Kazakhstan of February 7, 2005 "About compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it" (further - the Law on compulsory insurance of the worker from accidents).

10. Calculation of the Russian Party of People's Administration is made separately on each class of insurance. The total value of the Russian Party of People's Administration is determined by summing of the Russian Party of People's Administration, calculated on all classes of insurance.

11. Calculation of the Russian Party of People's Administration is perfromed by the following actuarial methods:

1) method of chain ladder without amendment on inflation according to Calculation of reserve occurred, but unclaimed losses by method of chain ladder without amendment on inflation in form according to appendix 9 to Requirements and adjusted for inflation according to Calculation of reserve occurred, but unclaimed losses by method of chain ladder adjusted for inflation in form according to appendix 10 to Requirements.

For the purposes of Requirements the method of chain ladder is understood as method of distribution of obligations of the insurer on implementation of insurance payments for the insured events which occurred in the accounting period or in the periods preceding the accounting period.

In method of chain ladder distribution of obligations of the insurer is based on the basis of payments (the paid losses) or the suffered losses of the insurance (reinsurance) organization.

In method of chain ladder adjusted for payment inflation (the paid losses) or the suffered losses increase by inflation indicator;

2) Bornhuetter-Ferguson method according to Calculation of reserve occurred, but unclaimed losses by Bornhuetter-Ferguson method in form according to appendix 11 to Requirements.

Bornkhyyuttera-Ferguson's method is based on method of chain ladder, distribution of obligations by which is based on the basis of payments (the paid losses) or the suffered losses, and determination of the expected size of anticipatory damages.

The expected size of anticipatory damages is equal to the work of earned premium and coefficient of unprofitability which size constitutes at least average value of the coefficients of unprofitability according to policies calculated on the complete financial years preceding to the periods of approach of losses considered by the insurance (reinsurance) organization in case of distribution of obligations in form according to appendix 11 to Requirements.

11-1. The unprofitability coefficient according to policies is calculated as the relation of size of the suffered losses, including expenses on settlement of losses, according to the insurance contracts (reinsurance) which became effective in the corresponding financial year to the earned insurance premiums according to the specified insurance contracts (reinsurance).

When calculating coefficient of unprofitability for policies the suffered losses, including expenses on settlement of losses, and the earned insurance premiums are considered on complete financial years to reporting date.

When calculating coefficient of unprofitability for policies the actuary if necessary makes adjustment of loss according to the insurance contract (reinsurance) which is large according to the method of determination of severe losses developed by the actuary of the insurance (reinsurance) organization and provided in authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body) according to the procedure and terms, stipulated in Item 15 Requirements.

12. In case of distribution by the actuary of obligations of the insurer on the basis of the suffered losses when calculating the Russian Party of People's Administration actuarial methods the Table of the accumulated losses of Calculation of reserve which occurred, but not claimed losses by method of chain ladder without amendment on inflation in form according to appendix 9 to Requirements is under construction by summing of the declared, but not settled losses and cumulative sizes of payments (the paid losses) for the end of every period of the approach of losses used for creation of triangle of accumulated losses according to the Table of accumulated losses on the basis of the suffered losses of Distribution of obligations of the insurance (reinsurance) organization on the basis of the suffered losses according to appendix 12 to Requirements.

In case of distribution by the actuary of obligations of the insurer on the basis of the suffered losses when calculating the Russian Party of People's Administration actuarial methods the Table of accumulated losses adjusted for inflation for last periods of Calculation of reserve occurred, but not claimed losses by method of chain ladder adjusted for inflation in form according to appendix 10 to Requirements is under construction by summing of the declared, but not settled losses and cumulative sizes of payments (the paid losses) for the end of every period of the approach of losses used for creation of triangle of accumulated losses according to the Table of accumulated losses on the basis of the suffered losses of Distribution of obligations of the insurance (reinsurance) organization on the basis of the suffered losses according to appendix 12 to Requirements.

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