PFN PIN 6.14 PFN PIN 6.14 Form 10: Summary statement of operations
PIN 6.14 Form 10: Guidance1. The Summary statement of operations provides the
DFSAwith quarterly information on the operations of a DIFC Branchof an Insurerthat is not incorporated in the DIFC.2. The Rulesin this section provide instructions as to the completion of specific lines on the form. The instructions are similar to those applicable to corresponding items on forms 1 and 3, which are not applicable to DIFCBusiness Returns.3. On this form, reinsurance premiums and reinsurance recoveries refer to amounts ceded and recovered in respect of insurance contracts entered into as part of the Insurer’s DIFC Insurance Business, regardless of where the reinsurance premiums and reinsurance recoveries are payable or receivable.
This form is required only for a
DIFC Business Return.
Insurermust present at item 1 the amount of its Gross Written Premiumin respect of its business conducted in the DIFC.
Insurermust present at item 2 the amount of reinsurance premium ceded in respect of insurance contracts whose Gross Written Premiumis recorded at item 1.
Insurermust present at item 4 the amount of claims paid in respect of its business conducted in the DIFC.
Insurermust present at item 5 the amount of reinsurance and other recoveries receivable in respect of claims recorded at item 4.
Insurermust present at item 7 the amount of the movement in the period reported on in the balance of Insurance Liabilities.
PIN 6.14.7 PIN 6.14.7
Insurermust present at item 8 the amount of the movement in the period reported on in the balance of reinsurance and other recoveries in respect of Insurance Liabilities.
PIN 6.14.7 Guidance
Insurance Liabilities are reported gross of reinsurance and other recoveries. Reinsurance and other recoveries that are recorded in respect of
Insurance Liabilitiesare reported as assets. An increase in Insurance Liabilitiesis reported on form 10 as an expense. In the same manner, an increase in the reinsurance and other recoveries in respect of Insurance Liabilitiesis recorded as revenue.
Insurerreports any amount at item 11.2, the Insurermust present in a Supplementary Note the amount of any such income receivable from Relatedparties, and a description of the nature of that income.
Item 13 reports the Insurer’s provision for outstanding claims. This item must be completed having regard to the following principles:(a) The liability must represent the estimated cost to the
Insurerof settling claims which it has incurred at the reporting date but which have not been finalised. The liability is in respect of both direct business and inward reinsurance business and must take into account unpaid claims, unreported claims, adjustments for claims development and the direct and indirect claims settlement costs that the Insurerexpects to incur in settling its outstanding claims;(b) In the case of Long-Term Insurancebusiness, this item must include all claims liabilities in respect of Contracts of Insurancethat are no longer included in the calculation of the net policy benefits at item 17;(c) The liability must be stated without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables);(d) The requirements for Recognitionand measurement of this liability are set out in sections 5.4 and 5.6; and(e) The liability does not include any amounts for catastrophe reserve, equalisation reserve or similar provisions that an Insurermay be required to maintain to satisfy regulatory requirements in a jurisdiction other than the DIFC.
Item 14 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
Returnis 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
Relatedliability, reported at item 13.
PIN 6.14.11 PIN 6.14.11
Premium Liability, represents the current portion of the cost of providing insurance service over the unexpired period of General Insurancecontracts in force at the balance date. This item must be completed having regard to the following principles:(a) The Premium Liabilityreported is required to cover the value of future claims payments and associated direct and indirect settlement costs arising during the unexpired portion of the contracts in question;(b) Item 15 must be recorded without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables); and(c) The requirements for Recognitionand measurement of this liability are set out in section 5.4.
PIN 6.14.11 Guidance
As stated in the
Guidanceto PIN rule 5.4.7, it is common practice for Insurersto account for their exposures on General Insurancecontracts in force by means of an unearned premium provision and (where necessary) a premium deficiency reserve. Where the aggregate of the unearned premium provision and the premium deficiency reserve (both gross of reinsurance) can be shown to be not less than the amount of Premium Liabilitydetermined in accordance with section 5.4, an Insurermay use that aggregate as a proxy for Premium Liabilityfor the purposes of recording item 15 on this form.
Reinsurance and other recoveries in respect of claims that have not yet been incurred are reported at item 16. 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
Relatedliability, reported at item 15.
PIN 6.14.13 PIN 6.14.13
Where, in determining the amount to be reported at item 14, an
Insurerhas made or considered making a provision for doubtful debt in respect of recoveries due or potentially due from a reinsurer, the Insurermust take into account the potential need to make a provision when determining any estimate to be included at item 14 or 16.
PIN 6.14.13 Guidance
It is common practice for
Insurersto account for their exposures on General Insurancecontracts in force by means of an unearned premium provision, an asset representing deferred reinsurance expense and (where necessary) a premium deficiency reserve. Insurersare referred to the Guidanceto item 15. An Insurerthat uses an unearned premium provision and premium deficiency reserve as a proxy for Premium Liabilities may record its deferred reinsurance expense at item 16.
Item 17 represents the net value of future Policy Benefits under
Long-Term Insurancecontracts that are in force as at the date to which the Returnis made up. The amount reported here must be determined in accordance with PIN section 5.6.