Regulatory Alerts2017-07-12
FMA Circular on the Assumed Interest Rate for Health Insurance Similar to Life Assurance (VAG 2016)
The Financial Market Authority mandates that insurance undertakings calculate reserves for increasing age in health insurance similar to life assurance using a maximum assumed interest rate of 1% starting from January 1, 2018. This requirement aligns with the prudent person principle and ensures that premiums remain sufficient to guarantee ongoing compliance with contract obligations despite falling capital market interest rates. Insurance companies must diligently monitor capital market risks and report immediately to management and the regulator if the actuary determines that the permanent fulfillment of obligations is endangered.
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