Insurance companies operating in the State of Kuwait are required to maintain solvency margin and technical reserves, enabling them to meet their financial obligations. Also, the Insurance Regulatory Unit requires insurance companies to appoint an actuary to prepare an actuarial study in case the insurance company does not comply with the prescribed ratios for calculating the technical reserves.
It is worth mentioning that “Baker Tilly” is an actuary licensed by the Insurance Regulatory Unit.
What are the legal and regulatory mandates that require companies to submit actuarial studies on technical reserves?
Article 146 of the Executive Regulations of Law No. 125 of 2019 regarding the regulation of insurance stipulates the following:
The following reserves as minimum are determined as follows:
- The reserves of unearned premiums are calculated by deducting from net revenues of retained premiums and insurance commissions upon issuing insurance policy that will be payable for the subsequent period as unearned premiums and commissions respectively, and it will be deferred as follows:A- The method of the last three months for marine transportation.B-The method of three hundred sixty-five (365) days for other insurance lines of business or forty (40%) percent of total net of subscriptions and commissions.
- The reserves of outstanding claims and expenses for claims settlements are calculated to equal the total estimated value of all outstanding claims for each line of business of general and property insurance.
- The reserves of incurred but not reported (IBNR) claims are calculated from the total outstanding claims after deducting the share of reinsurers as follows:a- The motor and property insurance, engineering insurance, energy insurance, medical insurance and general accident insurance except bodily liabilities and damages, is fifteen (15%) percent.b- Liability and other insurances are twenty (20%) percent.c- Insurance accepted from other companies is twenty-five (25%) percent.
If the company shall not comply with these ratios, then it shall submit a study from actuary.
What is the added value to business entities from engaging the services of preparing an actuary’s study on technical reserves?
- Ensure that the IRU requirements regarding the calculation of the technical reserves and solvency margin are met.
- Ensure that the company meets its financial obligations resulting from carrying on the insurance business.
- Enhance the confidence of stakeholders in the company and its ability to continue its business.
What are the services provided by Baker Tilly Kuwait?
Prepare actuarial study on technical reserves.
- Actuarial Technical Reserves
- Actuarial Report on Employee Benefits
- Actuary’s Report on Mergers
- Actuary’s Report on Examining the Financial Position
- Actuary’s Certificate of Authenticity of Insurance Operations for Licensing Purposes
- Actuary’s Certificate of Authenticity of Insurance Operations for Acquisition Purposes
- Actuary’s Certificate for Licensing a Foreign Insurer
- Actuarial Attestation of Financial Position of Insurance Companies
- IFRS 17 Engine (Calculator) Managed Service