1. Says of a competitive market both in terms of tariff and capacity. The largest contribution to the increase in premiums for a multi-year contract is expected to be related to the growing uncertainty in each of Eq`s elements. (1) with the duration of the insurance period. Kunreuther et al. Note 22 indicates that the premium of an insurance contract will be higher in the event of uncertain or ambiguous risks and Jaffee et al. Note 23 shows that an insurer`s aversion to ambiguity increases significantly with the duration of the policy. While the pricing of annual contracts will also be uncertain, it will be more important for a multi-year contract, as risk and policy conditions can change over time in a way that is difficult to predict. If the premium for a multi-year contract is guaranteed, an insurer should expect a change in risk and conditioning levels and prices in the contract from the outset.
For regulatory reasons, life activities are also roughly divided between investment contracts (called „qualifying insurance“) and non-investment contracts (so-called „pure protections“). A qualified insurance contract is a long-term contract that is neither a mere protection contract nor a reinsurance contract. A simple protection contract is insurance coverage only in the event of death or incapacity to work due to illness, illness or disability, the value of the rebate being limited to the amount of premiums paid. Different rules of conduct apply to each of these categories. For the investment activity, which also includes long-term care insurance contacts, the fcA business sourcebook (COBS) conduct applies, while the insurance conduct of Business Sourcebook (ICOBS) applies to non-investment operations (unless the company opts for the use of COBS). After the multi-year contract is drafted, we verify that the company cannot change the premium rate for the duration of the contract. This provides the policyholder with a long-term guarantee of insurability at a specified price during the policy term. The shareholder must provide sufficient capital to ensure that the level of protection is not less than 1-in-200 during the hedging period.