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

According to the Law of the Republic of Kazakhstan of December 18, 2000 "About insurance activity" 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. The insurance (reinsurance) organizations provide in National Bank of the Republic of Kazakhstan quarterly information according to appendices 1 and 2 to Requirements.

Information is provided no later than the tenth 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. Recognize invalid:

1) 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 April 30, 2010 No. 61 "About approval of Requirements to forming, method of calculation of insurance reserves and their structure, forms and the term of submission of the reporting under insurance reserves" (registered in the Register of state registration of regulatory legal acts at No. 6293);

2) the 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" (registered in the Register of state registration of regulatory legal acts at No. 8669, published on September 27, 2013 in the Yuridicheskaya Gazeta newspaper No. 146 (2521).

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

Approved by the Resolution of Board of National Bank of the Republic of Kazakhstan of May 6, 2014 No. 76

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

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" 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".

1. General provisions

1. 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) 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 the amount of insurance payment;

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;

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;

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

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), on the loss everyone declared, but not settled and on each class, 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 (reinsurance) and agreements transferred to reinsurance in form 1 of appendix 1 to Requirements;

2) register of not settled losses in form 2 of appendix 1 to Requirements;

3) register of payments for form 3 of appendix 1 to Requirements;

4) the register of current agreements of insurance (reinsurance) and agreements transferred to reinsurance by the insurance (reinsurance) organizations performing insurance activity in industry "life insurance" in form 4 of appendix 1 to Requirements;

5) register of current agreements of retirement annuity and other types of annuity insurance in form 5 of appendix 1 to Requirements;

6) register of the current agreements of annuity signed according to 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), in form 6 of appendix 1 to Requirements;

7) the register of insurance contracts (reinsurance) and supplementary agreements to them which became effective for the last 12 months in form 7 of appendix 1 to Requirements;

8) register of supplementary agreements to current agreements of insurance (reinsurance) and the agreements transferred to reinsurance in form 8 of appendix 1 to Requirements;

9) register of supplementary agreements to agreements of retirement annuity and other types of annuity insurance in form 9 of appendix 1 to Requirements;

10) register of supplementary agreements to the contract of annuity signed according to the Law on compulsory insurance of the worker from accidents in form 10 of appendix 1 to Requirements.

Magazines are kept in electronic form.

The insurance (reinsurance) organization represents to National Bank of the Republic of Kazakhstan (further - authorized body):

magazines according to appendix 1 to Requirements;

data for calculation of reserve occurred, but unclaimed losses by method of chain ladder without amendment on inflation in form 1 of appendix 2 to Requirements;

data for calculation of reserve occurred, but unclaimed losses by method of chain ladder adjusted for inflation in form 2 of appendix 2 to Requirements;

data for calculation of reserve occurred, but unclaimed losses by Bornhuetter-Ferguson method in form 3 of appendix 2 to Requirements;

data for calculation of reserve occurred, but unclaimed losses by Mack's method in form 4 of appendix 2 to Requirements.

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 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. 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.

4. Industry "general insurance"

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 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:

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