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THE RESOLUTION OF THE STATE INSURANCE SUPERVISION COMMITTEE IN CASE OF MF

of March 31, 1997 No. 24

About conditions of insurance and methodology of calculation of insurance rates

(as amended on on October 27, 2005)

DECIDES:

1. The Temporary methodology of calculation of insurance rates affirms (appendix N 1).

2. Recommend to insurers of the Republic of Moldova to use during preparation of documents for receipt of licenses the Temporary method of calculation of insurance rates on the corresponding types of insurance, with use of official statistical data of National bureau of statistics.

3. Determine that the rate of return of investment of insurance reserves included in calculation of insurance rates can be determined at the rate to 85% of refunding rate of National Bank at the time of calculation representation.

4. In case of personal insurance at the expense of means of legal entities in rules of insurance, issue of insurance policies for each insured worker shall be provided in agreements (irrespective of compulsory or voluntary insurance), according to the list of workers attached to the insurance contract.

 

Chief of the State Insurance Supervision Committee

Ion Barbulat

Appendix No. 1

to the resolution of the State insurance supervision of March 31, 1997 No. 24

Temporary methodology of calculation of insurance rates

This technique is developed according to the Art. 54, subitem e, f of the Law "About Insurance" for the purpose of determination and enhancement of unified methodological basis of calculation of insurance rates for personal and property types of insurance.

I. Personal insurance

Personal insurance is implied as types of personal insurance which provide the insurer liability on insurance sums in the following cases:

- death of insured;

- survival till certain period or achievement of certain age, stipulated in the insurance contract;

- emergence of accident.

The life insurance contract of accumulative type (except accidents) consist for the term of at least one year.

The insurance premium (gross premium) consists of basic unit (net rate) and loadings to basic unit at the expense of which expenses of the insurer on conducting case are covered. This technique determines method of calculation of basic unit.

The size of basic unit of insurance premium on personal insurance is calculated depending on the following factors:

1) age and sex of the insurer or the introduction of the agreement insured for the moment in force;

2) type, size and payment due date of insurance sums;

3) term and period of payment of insurance premiums;

4) duration of the agreement of insurance;

5) the nominal annual rate of return planned in calculation of investment income of means of insurance reserves for long-term types of insurance;

6) statistical data and life tables;

7) other materials.

a) Calculation of insurance rates

The methodology of calculation of insurance rates for personal types of insurance includes the following stages:

- on each risk the one-time net premium is calculated, and the net premium amount on all risks calculated according to nature of risks and ratio between them represents one-time net premium according to the insurance contract;

- the net premium is determined by the insurance contract which provides receipt of insurance payments by installments (monthly, quarterly, annually) based on one-time net premium and coefficients of payment by installments provided in insurance conditions;

- the gross premium is determined based on the size of net premium and the size of the established loading.

Depending on insurance term - "n" of years and method of the receipt of insurance payments provided in the insurance contract, the net premium for insured aged "x" is determined years as follows.

One-time net premium on survival insurance:

Формула 1 к Постановлению от 31.03.1997 №24

where: Pns - net premium on survival insurance;

lx - number lived aged "x" years;

n - term of insurance (years);

S - insurance sum;

V - the discounting multiplier meeting certain rate of return of i where: 1 V = _____ 1+i

Формула 2 к Постановлению от 31.03.1997 №24

(in case of not changing rate of return).

i - the nominal rate of return is determined in the amount of, not exceeding 85% of current bid of refinancing of National Bank of Moldova.

One-time net premium on death case: 

Формула 3 к Постановлению от 31.03.1997 №24

where: Pnd - one-time net premium on death case;

dx - number of the dead in year "x".

One-time net premium on accident insurance: 

Формула 4 к Постановлению от 31.03.1997 №24

where: Pna - one-time net premium on accident insurance;

Dm - the average amount of compensation on one insurance contract in case of insured event;

Sm - average insurance sum according to the insurance contract;

q - probability of emergence of insured event according to the insurance contract.

In case in the insurance contract payment of insurance sums for all above-stated risks is established, the one-time net premium will be equal:

Формула 5 к Постановлению от 31.03.1997 №24

Insurance gross - the award is determined by the following method: 

Формула 6 к Постановлению от 31.03.1997 №24

where: f - loading to insurance net premium in % to gross premium.

For individual insurance calculation of size of insurance rates is perfromed for each specific age of insurers. For collective insurance calculation is perfromed proceeding from middle age insured the companies.

When calculating net premiums for personal insurance these life tables of the population of Moldova for the last 3-5 years are used.

c) Examples of calculation of insurance rates for life

Insured at the age of 40 years (x = 40) signs the life insurance contract for 5 years (n=5).

The insurance sum is equal to 100 lei.

Load of this insurance is determined by the insurer in the amount of f=8%, the annual rate of return is equal to 20%.

We determine one-time insurance rate:

1. Net premium on survival: 

Формула 7 к Постановлению от 31.03.1997 №24

2. Net premium on risk on death case:

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