Question ID: 470
Regulation Reference: Guidelines on contract boundaries
Status: Final
Date of submission: 26 Nov 2015
Question
The question is the same as the question of which the answer is given on 27-10-2015 except for the following sentence:
"- the insurer cannot change the individual loadings to tariff as initial risk acceptance procedures include individual underwriting (incl. questionnaire and medical assessment where applicable) but the insurer has no right to re-perform underwriting at the contract renewal which eliminates the possibility of individual re-pricing at renewal (only the information from initial underwriting may impact individual's premium tariff; in particular claim history is not taken into account);"
This becomes:
"the insurer cannot change the individual loadings to tariff as initial risk acceptance procedures include individual underwriting (incl. questionnaire and medical assessment where applicable). The insurer have the actuarial tools to calculate the premium for each individual contract given initial risk acceptance informations assuming no relevant changes in the risk took place using the fact that the contract obligates the polisholder to inform the insurer if the insured risk is modified (examples: other profession, working less hours, getting *partially* disabled to work and so on). The insurer can in case of a modified risk change both contract speficications/terms as premium (without formal limit) and may stop insurance if it is not willing to cover the risk. "
In other words: There is relevant data on individual polisholders so the premium calculated fully reflects the risk associated with the contract since relevant changes in the risk should have been known by the insurer from the policy holder.
EIOPA answer
The insurer does not have ‘unilateral right’ as it is conditioned on information submitted by policyholders.