An insurer uses an intermediary to issue all of its contracts and as part of the arrangement the intermediary also settles the claims on behalf of the insurer with the intermediary absorbing all claim settlement costs. The costs borne by the intermediary are principally covered by deducting a commission from the policyholder premium. Could you please confirm our approach detailed below is correct, or advise on more appropriate treatment? • The insurer has completed a best estimate cash flow projection as detailed within Article 28 of the Delegated Acts. The insurer includes two sets of cashflows within its technical provisions, as detailed below: o The estimated claim settlement costs are included within the insurers gross technical provision, as per Article 28 (c), given the intermediary could fail and so the costs could fall back onto the insurer. o A claim settlement recovery from the intermediary is included within the gross technical provision, as per Article 28 (e), given the intermediary is obligated to meet these claim settlement costs.  If material, a default allowance on the claim settlement recovery is included within the technical provision to reflect the potential for counterparty default at a best estimate level. o These two cashflows perfectly offset (excluding the default allowance) and result in no residual cashflow in the technical provisions. This is consistent with actual practice, given the intermediary absorbs the claim settlement costs with no costs being transferred to the insurer. • This approach would be consistent with a transfer value for the obligations, as required under paragraph 55 of the Solvency II Directive. This reflects that the intermediary arrangement is associated with the obligations and so any third party receiving insurer would not incur any claim settlement costs.