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  • PFN PIN 6.5.4 PFN PIN 6.5.4

    Item 2 on the form includes only receivables. In completing this item, Insurers must have regard to the following principles:

    (a) Receivables must be stated net of any provision for doubtful debt or impairment of asset;
    (b) Item 2.2 includes items such as subrogation or salvage recoveries in respect of claims that have been paid;
    (c) Item 2.3 includes instalment premiums on General Insurance contracts that are not yet due for payment. It also includes premiums on General Insurance contracts that have been entered into but not yet recorded. It does not include premiums on Long-Term Insurance contracts that are not yet due for payment;
    (d) Item 2.4 includes amounts due and receivable under reinsurance contracts, including premiums due from cedants and Deposits retained by cedants, as well as amounts due from reinsurers in respect of recoveries against claims that have been paid. Where there is a legal right of set-off, an Insurer may report the working balance on an account with a cedant or reinsurer as a net receivable or payable amount. However if there is no legal right of set-off, amounts must be recorded gross as receivables and payables;
    (e) Item 2.5 includes amounts in respect of reinsurance and other recoveries in respect of claims that have been incurred but not paid, up to the date to which the Return is drawn up. This includes reinsurance and other recoveries in respect of IBNR. Because of the uncertainty of the outcome of outstanding claims and IBNR, it is necessary to estimate at least a part of this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the Related liability, reported at item 18;
    (f) Reinsurance and other recoveries in respect of claims that have not yet been incurred are reported at item 2.6. It is necessary to estimate this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the Related liability, reported at item 19; and
    (g) Where, in determining the amounts to be reported at item 2.4 or 2.5, an Insurer has made or considered making a provision for doubtful debt in respect of recoveries due or potentially due from a reinsurer, the Insurer must take into account the potential need to make a provision when determining any estimate to be included at item 2.5 or 2.6.

    • PFN PIN 6.5.4 Guidance

      It is common practice for Insurers to account for their exposures on General Insurance contracts in force by means of an unearned premium provision, an asset representing deferred reinsurance expense and (where necessary) a premium deficiency reserve. Insurers are referred to the Guidance to item 19. An Insurer that uses an unearned premium provision and premium deficiency reserve as a proxy for Premium Liabilities may record its deferred reinsurance expense at item 2.6 (for the current portion) and item 7.6 (for the noncurrent portion).


      Derived from DFSA RM11/2004 (Made 16th September 2004). [VER1/09-04]