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The document ceased to be valid since  July 13, 2014 according to Item 3 of the Resolution of Board of National Bank of the Republic of Kazakhstan of May 6, 2014 No. 76

RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of February 25, 2013 No. 75

About approval of Rules of creation of insurance reserves

According to the Code of the Republic of Kazakhstan of December 10, 2008 "About taxes and other obligatory payments in the budget" the Board of National Bank of the Republic of Kazakhstan DECIDES: (Tax code)

1. Approve the enclosed Rules of creation of insurance reserves (further - Rules).

2. Establish for the insurance (reinsurance) organizations provision of quarterly information according to appendices 1, of 2, 3 to Rules in Committee on control and supervision of the financial market and the financial organizations of National Bank of the Republic of Kazakhstan.

Information is provided no later than 18:00 hours of time of the city of Astana of the fifth working day of the month following reporting quarter in the Microsoft Office Excel format on the electronic medium providing not adjustability of the provided data.

3. Action of Item 31 of Rules extends to the contracts signed after enforcement of this resolution.

4. This resolution becomes effective after ten calendar days after day of its first official publication and extends to the relations which arose since January 1, 2012.

Chairman

G. Marchenko

It is approved

Ministry of Finance of the Republic of Kazakhstan

Minister

___________________ on July 31, 2013

(signature, date, official stamp)

 

 

Zhamishev B. B.

Approved by the Resolution of Board of National Bank of the Republic of Kazakhstan of February 25, 2013 No. 75

Rules of creation of insurance reserves

These rules of creation of insurance reserves (further - Rules) are developed according to the Code of the Republic of Kazakhstan of December 10, 2008 "About taxes and other obligatory payments in the budget" (Tax code), and determine procedure for creation of insurance reserves.

1. General provisions

1. For the purposes of Rules the following basic concepts are used:

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

2) not earned insurance premium - the part of insurance premium relating to the period of action of insurance protection according to the insurance contract (reinsurance) following settlement date;

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

4) indexation rate - the rate increasing payments of insurance company;

5) 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 men's and (or) female calculated on their basis (further - life tables, incidences, disability);

6) net - award (net - fees in case of payment by installments) - the amount of money estimated by the actuary on the basis of actuarial methods 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;

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

8) not settled loss - the declared requirement to the insurance (reinsurance) organization on implementation of insurance payment:

according to the insurance contract (reinsurance) according to which insurance payment was not performed or performed not in full;

in case of return of insurance premium as a result of agreement cancelation of insurance (reinsurance);

9) the overcautious person's share in insurance reserves - part of obligations of the overcautious person according to the insurance contract (reinsurance) for settlement date, except for the obligations connected with payment to the assignor of commission fee for the insurance contract (reinsurance) and other compensations from the overcautious person which are not relating to covering on the come insured events;

10) insurance premium - the added insurance premium to obtaining from the insurer (reinsurer) according to the insurance contract (reinsurance);

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

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

13) expenses on creation of insurance reserves - increase in the amount of insurance reserves from the beginning to the end the accounting period;

14) the income from decrease in the size of insurance reserves - decrease in the amount of insurance reserves from the beginning to the end the accounting period;

15) the income on creation of share of the overcautious person in insurance reserves - increase in share of the overcautious person in insurance reserves from the beginning to the end the accounting period;

16) expenses from decrease in share of the overcautious person in insurance reserves - reduction of share of the overcautious person in insurance reserves from the beginning to the end the accounting period;

17) the suffered losses - the amount of effected payments and not settled losses of insurance company for date of the report.

2. Requirements to information necessary for calculation of insurance reserves

2. Insurance reserves are created by the insurance (reinsurance) organization separately according to each insurance contract (reinsurance) and on each class of insurance, depending on type of insurance reserve. 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.

3. The insurance (reinsurance) organization perfroms calculation of insurance reserves on the basis of information containing in:

1) the register of current agreements of insurance and agreements accepted in reinsurance;

2) register of the agreements transferred to reinsurance;

3) register of losses;

4) register of payments;

5) the register of current agreements of insurance and agreements accepted in reinsurance by the insurance (reinsurance) organizations performing insurance activity in industry "life insurance";

6) register of current agreements of annuity on class of compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it;

7) register of the agreements transferred to reinsurance, the insurance (reinsurance) organizations performing insurance activity in industry "life insurance";

8) register of insurance losses (reinsurance) organizations performing insurance activity in industry "life insurance".

Magazines are kept in electronic form according to appendices 1, 3 to Rules.

3. Structure of insurance reserves

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

1) reserve of not earned premiums (further - RNP) - the part of the added insurance premium (fees) according to the insurance contract (reinsurance) relating to the period of action of insurance protection following settlement date (not earned premium) intended for obligation fulfillment on ensuring the forthcoming payments which can arise 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, but can happen in the future during validity of insurance (reinsurance);

3) reserves of losses:

the reserve occurred, but unclaimed losses (further - the Russian Party of People's Administration) - is 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 or the agreement it is not told the insurance (reinsurance) organization in reporting or the periods preceding it;

the reserve of the declared, but not settled losses (further - RZNU) - is 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. Expenses on settlement of insurance losses - cash amount, 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.

5. The insurance reserves having negative value accept value zero.

4. Industry "general insurance"

Calculation of RNP, Russian Party of People's Administration, RZNU

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

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

8. 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 all effective period of insurance protection (in days):

Формула к ПП НБ РК от 25.02.2013 №75

where:

The joint venture - insurance premium;

T1 - the number of days during which insurance protection according to the insurance contract (reinsurance) is effective;

T2 - the number of the days which expired from the moment of the beginning of action of insurance protection according to the insurance contract (reinsurance) before settlement date (inclusive).

9. 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.

10. Calculation of the Russian Party of People's Administration is perfromed by the following actuarial methods (methods of triangles on the basis of payments or the suffered losses):

1) method of chain ladder adjusted for inflation and without amendment on inflation.

Method of chain ladder - method of distribution of obligations of the insurer on implementation of insurance payments for the insured events which occurred in reporting or the periods preceding reporting.

In method of chain ladder distribution is based on payments of insurance company.

In method of chain ladder adjusted for inflation of payment increase by inflation indicator;

2) Bornhuetter-Ferguson method.

Bornkhyyuttera-Ferguson's method is based on method of chain ladder which is calculated on payments (the paid losses) and (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 the coefficient characterizing unprofitability taking into account share of the overcautious person determined according to the Rules of calculation of the coefficients characterizing unprofitability of the insurance (reinsurance) organization, approved by the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of March 25, 2006 No. 83 (registered in the Register of state registration of regulatory legal acts No. 4218);

3) Mack's method.

Mack's method is based on method of chain ladder which is calculated on payments of insurance company, at the same time the expected size of anticipatory damages is determined on the basis of linear regression according to form 4 appendices of 2 Rules.

This method is applied to calculation of the Russian Party of People's Administration for class of compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it.

If the Russian Party of People's Administration on class of compulsory insurance of the worker from accidents in case of execution of labor (office) obligations by it cannot be calculated by Mack's method, then the Russian Party of People's Administration is calculated any other actuarial method specified in this Item taking into account requirements of Item 16 of Rules.

11. The actuary makes the decision on determination of the size of the Russian Party of People's Administration on the basis of actuarial methods of calculations, stipulated in Item 10 Rules.

12. In case of implementation by the insurance (reinsurance) organization of activities for insurance class less than three years or insufficiency of data for calculation of the Russian Party of People's Administration by the methods specified in Item 10 of Rules, the Russian Party of People's Administration constitutes at least 5 (five) percent from the amount of the insurance premium added according to insurance contracts (reinsurance) for the last twelve months preceding settlement date.

13. When calculating the Russian Party of People's Administration by the methods specified in Item 10 of Rules, the actuary provides reasons about the chosen method of calculation of the size of the Russian Party of People's Administration. When calculating the Russian Party of People's Administration, according to Item 12 of Rules, the actuary provides reasons on insufficiency of data for calculation of the Russian Party of People's Administration.

14. The reasons specified in Item 13 of Rules are provided by the actuary quarterly, in time no later than 18:00 hours of time of the city of Astana of the fifth working day of the month following reporting quarter.

15. On class of mortgage insurance the size of the Russian Party of People's Administration constitutes at least 60 (sixty) percent from the insurance premium added according to insurance contracts (reinsurance) for the last twelve months preceding settlement date.

16. The actuary performs increase in the obligations of the insurance (reinsurance) organization connected with re-examination and (or) prolongation of extent of disability, deterioration in health of the beneficiary and increases the Russian Party of People's Administration by the specified amount which is reflected in the actuarial conclusion provided according to Rules of implementation of actuarial activities in the insurance market, issues, suspensions of action and deprivation of the license for implementation of actuarial activities about procedure for passing qualification examination by actuaries, involvement of the independent actuary, provision by the independent actuary of results of check of reliability of actuarial calculations in authorized state body on regulation and supervision of the financial market and the financial organizations, No. 120 (registered in the Register of state registration of regulatory legal acts at No. 1532) (further - the actuarial conclusion) approved by the resolution of Board of National Bank of the Republic of Kazakhstan of April 20, 2001.

The actuary can lower the amount of increase in the obligations connected with re-examination and (or) prolongation of extent of disability, deterioration in health of the beneficiary in case of availability in the actuarial conclusion of reasons for probability of decrease in duration of disability for the following reasons:

decrease in remaining life expectancy of persons which lost working capacity;

absence of occupational diseases at persons which lost working capacity;

improvement of working conditions of persons which lost working capacity on indicators of harm and danger of factors of the production circle;

reduction of amount of the performed work, its difficulties and intensity persons which lost working capacity;

decrease in extent of disability after re-examination.

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