Finansinspektionen’s regulations regarding non-life insurance undertakings’ calculation of contingency reserves

Finansinspektionen issued regulations specifying the provisions, dissolutions, and calculation methods for contingency reserves in non-life insurance undertakings. The rules update maximum provision formulas, remove the group rule and credit insurance equalisation parameters, and adapt the framework to the Solvency II Directive. These amendments, which also allow the reserve to cover all losses and apply to foreign branches in Sweden, entered into force on 1 January 2016.

Sweden

Finansinspektionen

Finansinspektionen’s regulations and general guidelines regarding standard regulations for non-life insurance undertakings’ calculation of contingency reserves

In force from 2013-08-01

Summary

The regulations specify the provisions a non-life insurance undertaking may make to the contingency reserve and the allowed dissolutions/withdrawals as well as the size of the contingency reserve. The regulations also describe how to calculate the maximum amount. The general guidelines provide examples of when FI may grant exemptions. The regulations update the parameters in the formulas for maximum provision and the fixed amounts that may be used when the calculation is index linked. The regulations repeal FFFS 2011:9.

Amendments

The amendments entail that the maximum provision to the contingency reserve may no longer be calculated as three times the highest actual retention for an individual risk and the group rule is removed. The aim is to ensure that the size of the contingency reserve corresponds to the risks in the operations conducted by the undertaking and prevents the reserve from being used for purposes other than those intended.

The regulations enter into force on 1 January 2016. amendment 2015:23

The amendments entail that the regulations are adapted to the Solvency II Directive. Finansinspektionen introduces regulations entailing that the contingency reserve will cover all losses and can be included in full in the own funds. Because the statutory requirement on equalisation provisions for credit insurance is being removed, FI is also removing equalisation provisions for credit insurance as a parameter in the calculation of the maximum provision to the contingency reserve. FI is also introducing regulations that the contingency reserve can be applicable for foreign insurance providers' branches in Sweden.

The regulations enter into force 1 January 2016. amendment 2015:19

Documents

FFFS 2013:8

FFFS 2013:8 (consolidated version)

Changes

Number

FFFS 2015:23

Date

2016-01-01