Close menu

Application provision

1.1 Unless otherwise stated, this Part applies to a non-directive friendly society.



Subject to 7.2, 7.3 and 7.4, the amount of the long-term insurance liability must be determined for each contract by a prospective calculation.



A retrospective calculation may only be applied to determine the liabilities where a prospective method cannot be applied to a particular type of contract or benefit, or where it can be demonstrated that the resulting amount of liabilities would be no lower than would be required by a prudent prospective calculation.



Appropriate approximations or generalisations may only be made where they are likely to provide the same, or a higher, result than a determination made in accordance with 7.1.



Where necessary, additional amounts must be set aside on an aggregated basis for general risks which are not specific to individual contracts.



The method of calculation of the amount of the liabilities and the assumptions used must not be subject to discontinuities from year to year arising from arbitrary changes and must recognise the distribution of profits in an appropriate way over the duration of each policy.



The liabilities for contracts under which the policyholder is eligible to participate in any established surplus must have regard to the level of the premiums under the contracts, to the assets held in respect of those liabilities, and to the custom and practice of the firm in the manner and timing of the distribution of profits or the granting of discretionary additions, as the case may be.