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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > CA Capital Adequacy > CA-2 Solvency Margin Requirements > CA-2.1 Solvency Margin Requirements > General Insurance Business > CA-2.1.15
  • General Insurance Business

    • CA-2.1.12

      For general insurance businessG , the solvency marginG must be determined by taking the higher of the two results arrived at by applying the calculations described in Paragraph CA-2.1.13 ('the premium basis calculationG ') and Paragraph CA-2.1.14 ('the claim basis calculationG '). Where the higher of the two results falls below the minimum fundG , it must be substituted by the amount of the minimum fundG .

      Amended: January 2007

    • CA-2.1.13

      The premium basis calculationG for general insurance businessG is determined by applying the following formula:

      Gross Premium Written X Reinsurance Allowance X Risk Factor (for each class of business)

      Where:

      Gross Premium Written =

      Premium written in the financial year (or annualised where the financial year is other than 12 months)

      Reinsurance Allowance (Premium basis) = (calculated on total business)

      the higher of 0.5 or (Total Net Premium Written /Total Gross Premium Written)

      Risk Factor =

      Class of insurance Risk Factor (general insurance) Risk Factor (Category C1 captive) Risk Factor (Category C2 captive)
      (a) Fire 15% 12% 12%
      (b) Damage to property 15% 12% 12%
      (c) Miscellaneous financial loss 15% 12% 12%
      (d) Marine cargo, marine hull 20% 20% 20%
      (e) Aviation 20% 20% 20%
      (f) Motor 20% 20% 20%
      (g) Engineering 20% 20% 20%
      (h) Liability 20% 20% (Category C2) 20%
      (i) Medical (short term ≤ 1 year) 20% 20% 20%
      (j) Other 20% 20% 20%
      Amended: January 2007

    • CA-2.1.14

      The claim basis calculationG for general insurance businessG is determined by applying the following formula:

      Average Gross Claims Incurred in the reference period X Reinsurance Allowance X Risk Factor (for each class of business)

      Where:

      Average Gross Claims Incurred =

      Gross Claims Incurred in the reference periodG (see CA-2.1.15) divided by the number of years covered by the reference periodG (or annualised where any financial year in the reference period is other than 12 months)

      Reinsurance Allowance (Claim basis) = (calculated on total business)

      the higher of 0.5 or (Total Average Net Claims Incurred in the reference periodG /Total Average Gross Claims Incurred in the reference periodG )

      Risk Factor =

      (a) Fire 20%
      (b) Damage to property 20%
      (c) Miscellaneous financial loss 20%
      (d) Marine cargo, marine hull 25%
      (e) Aviation 25%
      (f) Motor 25%
      (g) Engineering 25%
      (h) Liability 25%
      (i) Medical (short term ≤ 1 year) 25%
      (j) Other 25%
      Amended: January 2007

    • CA-2.1.15

      For the purposes of Paragraph CA-2.1.14 the reference periodG for all classes of business must be the three most recent financial years up to and including the current financial year.  In instances where the insurance firmG has been in business for less than three years, the claims basis calculation shall be equal to 0.

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