Magnitude control of technical reserves in Finland

Erkki Pesonen

ASTIN Bulletin, 1967, vol. 4, issue 3, 248-251

Abstract: This paper deals with some requirements put forward by the Finnish Supervisory Service on technical reserves mainly for solvency reasons. Consequently only one but nevertheless an important aspect of solvency problem is touched upon. The solvency question in its entirety is discussed in a paper of Dr. Pentikainen at this same colloquium.According to the instructions of the Supervisory Service, given by virtue of the Insurance Companies Act, insurance companies are obliged to calculate a so-called equalisation reserve in a specific way. Simplifying slightly, this equalisation reserve is that part of the technical reserves which exceeds the premium reserve and the claims reserve calculated according to classical actuarial principles; that is to say, the present value of the expectation value of the net insurance liabilities. The Insurance Companies Act calls for this reserve because conventional technical reserves do not take into account the random feature of claims amount.

Date: 1967
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