Contract boundary query

[edhough5]

Take for example a company writing a UL product that accepts regular premiums. Under its T&C's it has the option to close to new business (and not accept further premiums on existing products).

Would this mean that the company would have to effectively treat each premium as a reoccurring single premium within its BEL calculation i.e. not be able to take into account further regular premiums that would be expected to occur?

If this is true then is it also true that under Solvency I Pillar 2 or Pillar 1 Peak 2 you would be able to take credit for these expected premiums as contract boundary conditions don't apply?

 

[Iori_]

This is an interesting question. I think the future contractual premiums will be taken into account unless the company wants to be prudent on their side not to take them into account in setting reserves.

In terms of contract boundaries, I believe it is the insurance company who sets them? If insurer believes that closure to business is imminent then surely they can set the boundary to the expected date of closure for future valuations. As long as this does not happen I think the premiums will be taken into account in any of Solvency I or II.

I'm also curious as to what others on the forum think about this issue.