Insurance and pensions funds THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Insurance Insurance provides financial protection against misfortune to an individual institutional unit – the “misfortune” may be either death or the end of a fixed period (life insurance) or other risks and contingencies (non-life insurance)

Life insurance The output of life insurance is defined as Premiums (D.71) (actual premiums + premium supplements (D.44)) less Benefits + increase in reserves

Life insurance Premiums – regular payments by policy holders to insurance company Premium supplements – all income earned on reserves Benefits – payments to policy holders on death of the policy holder, or end of agreed term Increase in technical reserves – amount earned on funds held (and attributed to policy holder)

Non-life insurance Premium – payment to insurance company Claim – amount payable to insured in the event of an event covered by the policy The excess of premium over claims is invested and this provides an extra source of income to meet claims Output of insurance is premiums plus property income less claims

Non-life insurance A transaction is imputed, to assign the property income to policy holders, and is recorded in the secondary distribution of income account It is then paid back to the company in another imputed transaction, as “premium supplements”.

Non-life insurance When an event causes very large claims, excessive claims paid out can result in small or negative output, leading to negative value added To avoid this, national accounts follows the view of the insurance company Smooth the claims over time, and replace claims by these “adjusted claims” in the calculation of output

Non-life insurance Output = premiums plus premiums supplement (property income on reserves) less adjusted claims For catastrophes, part of claims may be recorded as capital transfers rather than current transfers This reflects the use made of claims, to replace infrastructure of capital assets

Non-life insurance

Non-life insurance

Non-life insurance SNA 2008 Paragraph 6.191 In circumstances where information is not available for either approach to deriving adjusted claims, it may be necessary to estimate output instead by the sum of costs including an allowance for normal profits

Thank you for your attention CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION