19.—(1) A registered insurer shall calculate the liabilities in respect of policies of an insurance fund established and maintained under section 17 of the Act for the general business of the insurer as the sum of —
(a)
premium liabilities, which shall be an amount not less than —
(i)
the unearned premium reserves of the fund calculated as the aggregate of unearned premium reserves for each policy of the fund determined in the manner provided in paragraph (5); or
(ii)
the unexpired risk reserves, calculated as the sum of —
(A)
the value of the expected future payments arising from future events insured under policies in force as at the valuation date, including any expense expected to be incurred in administering the policies and settling relevant claims; and
(B)
any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency,
whichever is the higher; and
(b)
claim liabilities, which shall be an amount not less than the sum of —
(i)
the value of the expected future payments in relation to all claims incurred prior to the valuation date (other than payments which have fallen due for payment before the valuation date), whether or not they have been reported to the insurer, including any expense expected to be incurred in settling those claims; and
(ii)
any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency.
(2) In determining the unexpired risk reserves referred to in paragraph (1)(a)(ii) and claim liabilities referred to in paragraph (1)(b), a registered insurer shall —
(a)
calculate the amount of unexpired risk reserves and claim liabilities as the amount net of reinsurance ceded —
(i)
by making separate estimates of the gross claims payments and recoveries from the reinsurance counterparty; and
(ii)
by taking into account the likelihood of default by the reinsurance counterparty; and
(b)
take into account any non-reinsurance recovery such as salvage and subrogation.
(3) Where there is no material change in —
(a)
the manner in which liabilities are reinsured during the period to which the data used to determine the unexpired risk reserves and claim liabilities relates; and
(b)
the manner in which liabilities are reinsured at valuation date,
a registered insurer may, instead of complying with paragraph (2)(a), calculate the amount of unexpired risk reserves and claim liabilities net of reinsurance ceded using data on claims payment that are net of reinsurance.
(4) A registered insurer shall make separate calculations of the unearned premium reserves, the unexpired risk reserves and the claim liabilities in the manner provided in paragraph (1) for each type of business described in Form 6 in the First Schedule to the Insurance (Accounts and Statements) Regulations 2004 (G.N. No. S 494/2004) that is carried on by the insurer.
(5) The amount of unearned premium reserves for a policy in respect of general business shall be —
(a)
subject to sub-paragraphs (b) and (c) and paragraph (6), an amount calculated on a basis not less accurate than the 1/ 24 th method;
(b)
in the case of a direct insurer which underwrites risks relating to cargo policies, an amount not less than 25% of the premiums for those policies or an amount calculated on a basis not less accurate than the 1/ 24 th method; or
(c)
in the case of an insurer which carries on the business of reinsurance of liabilities under insurance policies —
(i)
an amount not less than 25% of the premiums in the case of marine and aviation policies and 40% of the premiums in other cases; or
(ii)
an amount calculated on a basis not less accurate than the 1/24 th method.
(6) The amount of unearned premium reserves for a policy in respect of general business shall be calculated —
(i)
where the 1/24 th method or some other more accurate method is used, using an amount of premiums written which is reduced by the actual commissions payable; or
(ii)
in any other case, using an amount of premiums written without any deduction for commissions payable therefrom.
(7) In paragraph (5) —
“marine and aviation policy” means a policy of insurance —
(a)
upon goods, merchandise or property of any description transported on board vessels, aircraft or other means of conveyance, including incidental transit before and after shipment;
(b)
upon the freight of, or any other interest in or relating to vessels, aircraft or other means of conveyance;
(c)
upon vessels or aircraft, or upon machinery, tackle furniture or equipment of vessels or aircraft;
(d)
against damage arising out of or in connection with the use of vessels or aircraft, including third-party risks; or
(e)
against risks incidental to the construction, repair or docking of vessels, including third-party risks;
“premiums” means the amount of the premiums written in the accounting period after deducting for any premium refund andany payment in respect of reinsurance and retrocession.