PIN A2.1 Guidance
Guidance relates to the Rules on management and control of risk contained in PIN chapter 2. It has been prepared to assist directors of Insurers, their Auditors, and others concerned in applying those Rules.
Rules in PIN chapter 2 require an Insurer to address specific areas of risk, as well as maintain a generally sound risk management system. Insurers have some flexibility in their approach to these requirements.
3. This appendix provides some general comment on the objectives of the
Rules, risk management and control mechanisms. It also provides specific comment on the following selected aspects of the five broad areas of risk identified in PIN section 2.3, that are considered to be of particular relevance to Insurers:
a. Balance sheet and market risk components:
i. reserving risk;
ii. investment risk (including risks associated with the use of derivatives);
iii. underwriting risk;
iv. claims management risk;
v. product design and pricing risk; and
vi. liquidity management risk;
b. Credit quality risk;
c. Non-financial or operational risk components:
i. business continuity planning risk; and
ii. outsourcing risk;
d. Reinsurance risk; and
4. It is not the purpose of this appendix to provide guidance in areas that are common to all or many
Authorised Firms other than Insurers. The principal objective is to address areas that are of specific relevance to Insurers.
5. The procedures set out in this appendix do not constitute a checklist of necessary procedures. An
Insurer cannot assume that implementing all of the procedures set out in this appendix will guarantee that the Insurer complies with the requirements to which it is subject.
6. Since this appendix is not intended to be prescriptive or exhaustive, it cannot be regarded as a substitute for reading the
Rules themselves and taking professional advice. An Insurer should contact the DFSA if there are any areas which it would like to discuss further.
Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]