Question ID: 2582
Regulation Reference: Guidelines on valuation of technical provisions
Topic: Technical Provisions (TPs)
Article: Article 77(2) of the SII Directive; Art. 28 of DR 2015/35
Status: Final
Date of submission: 20 Feb 2023
Question
When an insurer has agreed a claim settlement with a policyholder, but the claim amount is unpaid, which can often occur due to timing delay as claim payments can take a couple of days to clear an insurers bank account. Should these claim payments be included within the technical provisions consistent with Article 28 or should they be held outside of the technical provisions as a payable given they are no longer subject to insurance risk as the amount is agreed? We note under IAS these amounts wouldn't be included within the claims provision as the amounts are agreed.
Would the interpretation differ if the claim payment was only a partial payment with the full claim amount to be agreed?
EIOPA answer
Whether an amount belongs to the technical provisions or to the insurance and intermediaries' payables does not depend on whether it has been agreed upon with the policyholder, but the due date of the amount. All claims that are due for payment from the valuation date onwards and that are within the contract boundary should be included in the technical provisions. Claim payments that are past due should instead be included in the insurance and intermediaries' payables.