Order on Notification of the Technical Basis and Other Matters for Life Insurance Business

Order on Notification of the Technical Basis and Other Matters for Life Insurance Business

Pursuant to Section 29, paragraph 3, Section 139, paragraph 5, and Section 316, paragraph 1, of Act No. 718 of 13 June 2023 on Insurance Business, it is hereby prescribed:

Scope of Application

Section 1. This Order applies to life insurance companies, cross-sectoral pension funds, and branches of foreign companies that have permission to conduct life insurance business pursuant to Section 14 of the Act on Insurance Business.

Paragraph 2. The companies mentioned in paragraph 1 are hereinafter referred to as life insurance companies.

Content and Form

Section 2. Notification of the technical basis and other matters for life insurance business, as well as amendments thereto, shall be made by using the form prepared by the Danish Financial Supervisory Authority for this purpose, which is named "Notification of the Technical Basis and Other Matters for Life Insurance Business".

Paragraph 2. The notification must indicate which insurance class the notification concerns.

Paragraph 3. The notification must

1. reflect the products that the life insurance company intends to use, including describing any guarantees in more detail,
2. be in such a clear and precise form that it can readily serve as the basis for a qualified actuary's control calculations, and
3. in its entirety be suitable to provide a comprehensive picture of the life insurance company's activities regarding insurance and pensions.

Paragraph 4. It must be clearly indicated/marked in the notification which changes have been made in relation to previous notifications of the technical basis and other matters for life insurance business.

Paragraph 5. The notification must contain a mathematical description and review of the notified matters.

Paragraph 6. The notification must contain a statement regarding the legal and economic consequences for the individual policyholder and other entitled parties under the insurance contracts. The statement must at a minimum comply with the requirements in Section 3, paragraph 1, and paragraphs 3-5.

Paragraph 7. The notification must contain a statement regarding the legal, economic, and actuarial consequences for the life insurance company. The statement must at a minimum comply with the requirements in Section 3, paragraph 2, and paragraphs 6-7.

Paragraph 8. The life insurance company must each year before the end of June, for the first time before the end of June 2014, submit a compilation of the company's total valid notified technical basis and other matters for life insurance business to the Danish Financial Supervisory Authority. The compiled technical basis and other matters for life insurance business must include all notifications of the technical basis and other matters for life insurance business that have been submitted to the Danish Financial Supervisory Authority pursuant to Section 29, paragraph 1, of the Act on Insurance Business before the end of the preceding year. The compiled technical basis and other matters for life insurance business must not contain previously notified rules and rates that are no longer valid at the end of the preceding year. The form prepared by the Danish Financial Supervisory Authority for this purpose, which is named "Compilation of the Notified Technical Basis and Other Matters for Life Insurance Business", must be used.

Paragraph 9. If the compiled technical basis and other matters for life insurance business mentioned in paragraph 8 contains parts that, pursuant to Section 5, paragraph 2, are not publicly accessible, the life insurance company may choose to submit an extra copy of the compiled technical basis and other matters for life insurance business to the Danish Financial Supervisory Authority, where these parts are omitted. In that case, it must be clearly stated in the submitted compiled technical basis and other matters for life insurance business which of the bases and other matters contain parts that, pursuant to Section 5, paragraph 2, are not publicly accessible.

Section 3. In connection with notification pursuant to Section 29, paragraph 1, items 1-5, of the Act on Insurance Business, the life insurance company must state that the notified rules are reassuring and reasonable towards the individual policyholders and other entitled parties under the insurance contracts.

Paragraph 2. The life insurance company must state the data basis that underlies the notification.

Paragraph 3. In connection with notification of interest, expense, and risk rates pursuant to Section 29, paragraph 1, items 2 and 3, of the Act on Insurance Business, the life insurance company must

1. for insurance covered by the Order on the Contribution Principle, for each contribution group, further state that the notified does not lead to redistribution of significant economic magnitude between the insurances beyond what follows from the risk coverages included in the insurances, and
2. for other insurances with a right to bonus, further state that the notified does not lead to redistribution of significant economic magnitude between the insurances beyond what follows from the risk coverages included in the insurances.

Paragraph 4. The statements pursuant to paragraph 3 must be accompanied by documentation based on the life insurance company's actual returns on investments, actual expense conditions, and actual loss experience.

Paragraph 5. In connection with notification of interest, expense, or risk rates pursuant to Section 29, paragraph 1, item 3, of the Act on Insurance Business, the life insurance company must, for each contribution group or each group of insurances that the notification concerns, disclose the year's expected or actual interest, expense, or risk result, and state the consequences for collective bonus potential, special bonus reserves, and equity. The life insurance company must also indicate the expected interest, expense, or risk result for the five coming years.

Paragraph 6. In connection with notification of the basis for calculating life insurance reserves, cf. Section 29, paragraph 1, item 6, of the Act on Insurance Business, the life insurance company must state that the calculation uses

1. the best possible estimates of the involved insurance risks, including mortality (observed current mortality and expectation of future life expectancy improvement) and disability frequency, etc.,
2. the best possible estimates of the expenses that the contracts are expected to be administered for on average under the conditions prevailing in the market, and
3. a discount rate calculated in accordance with the requirements set forth in the legislation.

Paragraph 7. The life insurance company must each year before the end of the year submit notification of the mortality mentioned in paragraph 6, item 1, which must be determined in accordance with a life expectancy analysis conducted for the year based on the Danish Financial Supervisory Authority's latest published guidelines for the preparation of life expectancy analysis and the latest published benchmark for life expectancy assumptions.

Paragraph 8. In connection with notification of the mortality mentioned in paragraph 6, item 1, the life insurance company must state the life expectancy analysis mentioned in paragraph 7, corresponding to the Danish Financial Supervisory Authority's latest published guidelines for reporting life expectancy analysis.

Paragraph 9. In connection with notification of the risk margin used for calculating life insurance reserves, cf. Section 29, paragraph 1, item 6, of the Act on Insurance Business, the life insurance company must state that the risk margin corresponds to the estimated margin that the life insurance company is expected to have to pay to a purchaser of the life insurance company's portfolio of life insurance and investment contracts, for the purchaser to assume the risk of fluctuations in the size and timing of payments of the guaranteed benefits.

Public Accessibility

Section 4. The notification is publicly accessible when it is registered with the Danish Financial Supervisory Authority, cf. however Sections 5 and 6.

Paragraph 2. The compiled technical basis and other matters for life insurance business mentioned in Section 2, paragraph 8, is publicly accessible, cf. however paragraph 3.

Paragraph 3. If the compiled technical basis and other matters for life insurance business mentioned in Section 2, paragraph 8, contains parts that, pursuant to Section 5, paragraph 2, are not publicly accessible, and if the life insurance company, as a result thereof, in accordance with Section 2, paragraph 9, chooses to submit an extra copy of the compiled technical basis and other matters for life insurance business to the Danish Financial Supervisory Authority where these parts are omitted, it is solely the latter compiled technical basis and other matters for life insurance business that is publicly accessible.

Section 5. Notwithstanding Section 2, paragraph 3, the life insurance company may include the insurance technical calculations and methods associated with a notification that the life insurance company considers to be a genuine innovation in relation to available knowledge in the field, and which the life insurance company itself treats confidentially, in a separate appendix. The form prepared by the Danish Financial Supervisory Authority for this purpose, which is named "Statement pursuant to Section 5, paragraph 1", must be used.

Paragraph 2. The Danish Financial Supervisory Authority may decide that the entire appendix or parts of the appendix, which is named "Statement pursuant to Section 5, paragraph 1", shall not be publicly accessible, if the Authority specifically assesses that it concerns a genuine innovation in relation to available knowledge in the field, and that the life insurance company would suffer significant economic damage from publication, or that publication would give other life insurance companies an unjustified competitive advantage.

Section 6. The life insurance company may include the parts of the statements mentioned in Section 2, paragraph 7, which the life insurance company assesses are not necessary to understand the most essential elements of the insurance or are not necessary to perform control calculations, in a separate appendix that is not publicly accessible, cf. however paragraph 2. The form prepared by the Danish Financial Supervisory Authority for this purpose, which is named "Statement pursuant to Section 6, paragraph 1", must be used. Furthermore, the life insurance company may include the following in "Statement pursuant to Section 6, paragraph 1":

1. The statement regarding life expectancy analysis mentioned in Section 3, paragraph 8.
2. Compilation of the notified matters and previously notified matters beyond that mentioned in Section 2, paragraph 3, item 2.
3. Other supplementary information to the Danish Financial Supervisory Authority.

Paragraph 2. The Danish Financial Supervisory Authority may decide that the entire appendix or parts of the appendix, which is named "Statement pursuant to Section 6, paragraph 1", shall be publicly accessible, if the Authority specifically assesses that the appendix in whole or in part is necessary to understand the most essential elements of the insurance or to perform control calculations.

Section 7. The Danish Financial Supervisory Authority sends a copy of the registered notifications to any person who requests it. The Danish Financial Supervisory Authority may require the person to specify in more detail the notification or notifications for which a copy is requested.

Paragraph 2. If the Danish Financial Supervisory Authority has not sent the copy mentioned in paragraph 1 to a person no later than 10 days after the person has requested the Authority to do so, the Authority must inform the person of the reason for this. The Danish Financial Supervisory Authority must simultaneously inform when the person can expect to receive the copy.

Paragraph 3. The Danish Financial Supervisory Authority is entitled to demand payment for copying and sending the notifications entered in the register with accompanying appendices. The payments must not exceed the payment specified in Order No. 1586 of 19 December 2018 on payment for the issuance of documents etc. under the Act on Public Access to Information in the Public Administration.

Authorization, Signature, and Submission

Section 8. It must be evident from the life insurance company's procedure for notification of the technical basis and other matters for life insurance business, as well as amendments thereto, which persons the life insurance company has authorized to sign the notification of the technical basis and other matters for life insurance business and the compiled technical basis and other matters for life insurance business mentioned in Section 2, paragraphs 8 and 9.

Paragraph 2. Notification of the technical basis and other matters for life insurance business, as well as amendments thereto, must be submitted to the Danish Financial Supervisory Authority in one signed copy. The signed notification, including the accompanying actuary's declaration and any statements pursuant to Section 5, paragraph 1, or Section 6, paragraph 1, must be submitted either in paper form or electronically to the Danish Financial Supervisory Authority.

Paragraph 3. The compiled technical basis and other matters for life insurance business mentioned in Section 2, paragraphs 8 and 9, must be submitted electronically to the Danish Financial Supervisory Authority in one signed copy.

Actuary's Declaration

Section 9. A notification pursuant to Section 2 must be accompanied by a separate declaration from the life insurance company's responsible actuary regarding the notified matters. The declaration must be submitted to the Danish Financial Supervisory Authority in one signed copy. The actuary must in their statement declare whether the actuary agrees that the notified matters are in accordance with Section 30, paragraphs 1-4, of the Act on Insurance Business. The actuary must further declare whether the actuary agrees with the life insurance company's statement pursuant to Section 3.

Paragraph 2. The form prepared by the Danish Financial Supervisory Authority for this purpose, which is named "Actuary's Declaration", must be used.

Paragraph 3. The declaration mentioned in paragraph 1 is not publicly accessible.

Penal Provisions

Section 10. Intentional or grossly negligent violation of Section 2, Section 3, Section 8, and Section 9, paragraphs 1 and 2, is punishable by a fine.

Paragraph 2. Companies etc. (legal persons) may be subject to criminal liability pursuant to the rules in Chapter 5 of the Criminal Code.

Entry into Force

Section 11. This Order enters into force on 1 January 2025.

Paragraph 2. Order No. 932 of 4 July 2013 on notification of the technical basis and other matters for life insurance business is repealed.

Danish Financial Supervisory Authority, 5 December 2024

Louise Mogensen / Line Bergmann