Asset Management - IC-99 Exam Study Notes

Claims expected to be incurred in respect of the business to be written are to be estimated for the period of consideration. Adequate Provision to be made for the claim ratios to vary on a cyclical basis about the basic level.
Stress tests enable insurers to study the quantitative impact of different scenarios and its effect on the solvency of an insurer. The stresses may be financial, operational, legal, liquidity based or be related to any other risk that might have an adverse economic impact on the insurer.
Though non-life insurers incur underwriting losses substantially in almost all financial years, they finally become able to generate net profit and pay dividends in most of the cases due to their ability and expertise to earn good amount of investment income on investment of policyholders funds and shareholders funds.
Asset Liability Management (ALM) plays a critical role in matching and managing assets with existing as well as emerging liabilities for different business lines for the years to come in a financial institution like insurance and bank.
Section 83(4) of the insurance Amendment Act 2015 provides that if, at any time, an insurer or re-insurer does not maintain the required control level of solvency margin, he shall, in accordance with the directions issued by the Authority, submit a financial plan to the Authority, indicating a plan of action to correct the deficiency within a specified period not exceeding six months.

Important Points for IC 99 - Asset Management Exam