27. The output of other insurance services, both life and non-life, is calculated as:
actual premiums earned
plus premium supplements
(B)
less claims due
less increases (plus decreases) in technical provisions against outstanding risks
and technical provisions for with-profits insurance
28. Actual premiums earned are the actual premiums that cover the risks incurred
during the current period. Actual premiums earned are usually not equal to
actual premiums receivable, as the latter often cover risks incurring in both the
current and subsequent periods.
Premium supplements are identical to property income attributed to policy
holders, which is the entire income earned by insurance enterprises by investing
their insurance technical reserves, excluding any income from insurance enterprises' own funds. Insurance technical reserves contain two elements: (a) prepayments
of insurance premiums and reserves for outstanding claims, arising from the
difference between premiums earned and premiums receivable and between claims
payable and claims due, and (b) technical provisions against outstanding risks and
technical provisions for with-profits insurance. The latter element applies
only to life insurance. Insurance technical reserves are usually invested in
financial assets which yield income in the form of interest or dividends. However,
these reserves may also be invested in real estate, for example, in which case
income is earned as operating surplus.
29. Claims due cover events that occur within the current period. Frequently,
claims do not become payable until a later period than when the event giving rise
to them occurred. Claims due are therefore not equal to claims payable.
Changes in technical provisions against outstanding risks and technical
provisions for with-profits insurance consist of allocations to technical provisions
against outstanding risks and provisions for with-profits insurance policies to
build up the capital sums guaranteed under these policies. These provisions
relate to life insurance only.
All four items in equation (B) should be measured excluding holding gains and
losses.