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Erscheinung:06.06.2016 | Topic Liquidity requirements Regulation on the Principles Underlying the Calculation of the Premium Reserve

Deckungsrückstellungsverordnung (DeckRV)




Translation: BaFin

This translation is furnished for information purposes only. The orginal German text is binding in all respects.

By virtue of section 65 (1) and section 79 of the Insurance Supervision Act as amended by Article 1 number 27 and number 33 of the Act of 21 July 1994 (Federal Law Gazette I, p. 1630), the Federal Ministry of Finance, in agreement with the Federal Ministry of Justice, issues the following Regulation:


Section 1
Scope of application

(1) The present Regulation shall apply to

  1. life insurance undertakings with the exception of funeral expenses funds;
  2. accident insurance undertakings writing insurance with premium refund; and
  3. insurance undertakings providing pension benefits in general liability insurance, motor vehicle liability insurance, motor vehicle accident insurance and general accident insurance.

(2) The present Regulation shall apply to contracts that are not based on tariffs approved by the supervisory authority.

Section 2
Maximum interest rate (Euro)

(1) For insurance contracts that offer a guaranteed rate of interest and are denominated in Euro or the national currency unit of a member state participating in the European Economic and Monetary Union, the maximum interest rate used to calculate the premium reserve shall be 2.25 per cent.

(2) The technical interest rate used by an insurance undertaking at the time of conclusion of the contract to calculate the premium reserve shall apply throughout the entire contract term. For insurance contracts concluded as part of a pension split [interne Teilung] pursuant to section 10 of the German Pension Equalisation Act (Versorgungsausgleichsgesetz – VersAusglG) in favour of a person entitled to equalisation payments, the interest rate on which the original insurance contract was based may be applied. The same applies to life insurance contracts concluded between insurance undertakings and pension providers as defined in the Pension Equalisation Act, where the insured person is the person entitled to equalisation payments. This shall be without prejudice to section 5 (3) and (4).

(3) For contracts based on the same general insurance policy conditions and the same principles used to calculate premiums and the mathematical provisions, Pensionskassen may use a uniform technical interest rate which, notwithstanding subsection (2) sentence 1, may vary during the contract term provided it does not exceed the maximum interest rate applicable at the time. Where necessary, the technical interest rate may be lowered progressively with the approval of the supervisory authority.

Section 2a
Maximum interest rate (other currencies)

(1) For insurance contracts that offer a guaranteed rate of interest and are denominated in currencies other than those referred to in section (2) above, the maximum interest rates used to calculate the premium reserve shall be as follows for the respective currencies:

  1. where the currency is the Danish krone, the maximum interest rate shall be 2 per cent;
  2. where the currency is the Estonian kroon, the maximum interest rate shall be 3.5 per cent;
  3. where the currency is the forint, the maximum interest rate shall be 2.75 per cent;
  4. where the currency is the Icelandic krona, the maximum interest rate shall be 4.5 per cent;
  5. where the currency is the lats, the maximum interest rate shall be 2.25 per cent;
  6. where the currency is the litas, the maximum interest rate shall be 2.25 per cent;
  7. where the currency is the Norwegian krone, the maximum interest rate shall be 3 per cent;
  8. where the currency is the Swedish krona, the maximum interest rate shall be 2.75 per cent;
  9. where the currency is the Slovak koruna, the maximum interest rate shall be 4 per cent;
  10. where the currency is the tolar, the maximum interest rate shall be 3.25 per cent;
  11. where the currency is the Czech koruna, the maximum interest rate shall be 2.25 per cent;
  12. where the currency is the zloty, the maximum interest rate shall be 3.75 per cent;
  13. where the currency is the Maltese lira, the maximum interest rate shall be 2 per cent;
  14. where the currency is the pound sterling, the maximum interest rate shall be 3.25 per cent;
  15. where the currency is the Cypriot pound, the maximum interest rate shall be 2 per cent;
  16. where the currency is the Swiss franc, the maximum interest rate shall be 2 per cent;
  17. where the currency is the US dollar, the maximum interest rate shall be 3.0 per cent;
  18. where the currency is the yen, the maximum interest rate shall be 1 per cent.

For all other currencies, the maximum interest rate shall be 2 per cent.

(2)The technical interest rate used by an insurance undertaking at the time of conclusion of the contract to calculate the premium reserve shall apply throughout the entire contract term.

Section 3
Exceptions

(1) In the case of single-premium insurance contracts with terms of up to eight years and denominated in Euro or the national currency unit of a member state participating in the European Economic and Monetary Union, the relevant technical interest rate may not exceed 85 per cent of the most recent monthly value of the yield of public bonds as indicated in the capital market statistics published by the Deutsche Bundesbank in its monthly reports, the residual time to maturity matching the contract term. The time relevant for determining the technical interest rate of an individual contract is the time of premium payment.

(2) Subsection (1) sentence 1 above shall apply mutatis mutandis to annuity insurance contracts without surrender value that are denominated in Euro or the national currency unit of a member state participating in the European Economic and Monetary Union from the date annuity payments begin for a period of eight years following that date, as well as to the portion of the premium reserve that is allotted to the regular payment of annuities, subject to the proviso that the maximum technical interest rate is 85 per cent of the arithmetic average of the past monthly values of the yield of public bonds as indicated in the capital market statistics published by the Deutsche Bundesbank in its monthly reports, the residual time to maturity being one to eight years. The time relevant for determining the technical interest rate of an individual contract is the time when the payment of annuities begins.

Section 4
Maximum Zillmer rates and actuarial calculation method

(1) By way of zillmerisation, the claims for reimbursement of the paid one-off acquisition costs are covered in respect of individual contracts up to the Zillmer rate from inception of the insurance contract by the maximum possible premium portions which, under the calculation principles applied and during the period for which the premium is paid, are earmarked neither for benefits payable in the insured event nor for covering operating expenses. The Zillmer rate may not exceed 4 per cent of the total of all premiums.

(2) The maximum possible premium portions within the meaning of subsection (1) above shall be deducted from the cash value of future premiums to be applied in the calculation of the premium reserve to be set up for the individual contract to the extent to which they have not yet covered the paid one-off acquisition costs in the amount of the Zillmer rate and to which they are consequently equal to the maximum amounts owed by policyholders which may be capitalised in accordance with section 15 (1) of the Regulation on Insurance Accounting (Versicherungsunternehmens-Rechnungslegungsverordnung RechVersV).

(3) In the case of life insurance contracts for which statutory surrender values require that the level of the premium reserve compared to that calculated in accordance with section 341f of the German Commercial Code (Handelsgesetzbuch – HGB) be increased as set forth in section 25 (2) of the Regulation on Insurance Accounting, the maximum possible premium portions pursuant to subsection (1) above shall be those which are not needed for setting up the increased premium reserve and which, under the calculation principles applied and during the period for which the premium is paid, are earmarked neither for benefits payable in the insured event nor for covering operating expenses. Sentence 1 above shall apply mutatis mutandis to accident insurance as defined in section 11d of the Insurance Supervision Act if and to the extent that increased surrender values are contractually guaranteed in accordance with the relevant statutory provisions applicable to life insurance.

(4) By way of derogation from subsection (1) above and depending on the underlying tariff, the Zillmer rates approved by the supervisory authority before 29 July 1994 for comparable tariffs may be used insofar as the technical interest rate does not exceed 3.5 per cent. In the case of a technical interest rate exceeding the afore-mentioned rate of interest, i.e. (3.5 + 0.1 t) per cent, the maximum Zillmer rate to be considered shall be (35 – 0.4 t) per mill of the sum insured or (35 – 0.4 t) per cent of the annual annuity amount. In the case of term insurance, the Zillmer rate related to a sum or annuity may, as a function of the technical interest rate, be determined in the same way as with comparable tariffs approved by the supervisory authority. Sentences 1 and 2 shall apply to insurance contracts concluded not later than 31 December 1997 only.

Section 5
Actuarial calculation principles

(1) In respect of the derivation of calculation principles that is to be made in accordance with actuarial methods, all circumstances that may cause the data gained from the underlying statistics to change and fluctuate shall be considered and weighted appropriately in accordance with actuarial principles. A derivation of calculation principles on a best-estimate basis shall not be sufficient. An estimate of future circumstances must include a negative deviation of the relevant factors from the assumptions used and derived from the statistics. This applies to the valuation which as a matter of principle relates to individual risks, and by analogy to the valuation in respect of risks which cannot be individualised and for which no sufficient statistic data are available. The surplus participation must be taken into account in the appropriate manner over the term of each contract.

(2) In the case of contracts offering a surplus participation, the valuation method may explicitly or implicitly take account of any type of future bonuses in a manner that is compatible with the other assumptions about the future development and with the present method used to distribute the surplus.

(3) As regards the calculation required under section 341f (2) of the Commercial Code of the expected asset yields of the undertaking, the yield to be applied in that calculation shall be the computed arithmetic average of a reference period of ten calendar years of the yields of public bonds. The arithmetic average is calculated based on the annual averages derived from the end-of-month spot interest rates for bonds with a residual maturity of 10 years as published in the “Euro area yield curve” statistics of the ECB. The end-of-month interest rates of the first nine months are to be taken as a basis for the current financial year. The annual averages for the years 2001 to 2009 are 5.03, 4.92, 4.16, 4.14, 3.44, 3.86, 4.25, 4.23 and 3.81 percent, respectively.

(4) At each balance sheet date, the average value calculated as described in subsection (3) above (reference interest rate) is to be compared with the highest technical interest rate applicable to the contract during the next 15 years. If the reference interest rate is lower than the highest applicable technical interest rate, the premium reserve to be set up for the individual contract shall be calculated as follows:

  1. for a period of 15 years following the balance sheet date, the calculation shall be based on the minimum value of the technical interest rate applicable in each year and the reference interest rate,
  2. for the period after the expiry of the said 15 years the calculation shall be based on the applicable technical interest rate;

if not, the applicable technical interest rate shall be used for the entire residual term of the contract.

Section 6
Entry into force

This Regulation shall enter into force on the day after its promulgation.

The Bundesrat has given its consent.

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