kontinuita - Komunálna Poisťovňa

NOTES TO
THE FINANCIAL
STATEMENTS
c) Deferred acquisition cost (DAC) for insurance contracts
The costs for the acquisition of insurance contracts include
all direct and indirect costs incurred in connection
with concluding insurance contracts. Acquisition
costs incurred in the current accounting period and related
to income of future accounting periods are deferred.
Non-life insurance
Deferred acquisition cost in non-life insurance is calculated
from the total amount of acquisition costs of
the current accounting period, and is divided into current
and future accounting periods in the same proportion
as the technical unearned premium reserve.
Long-term insurance contracts with fixed or guaranteed
contractual terms
Considering the method used for zillmerization of life
insurance reserves, the acquisition costs in life insurance
are deferred by this method and by capitalising
the temporarily negative balances of technical reserves
in life insurance.
Long term insurance contracts without fixed contractual
terms – unit-linked contracts
The Company uses the actuarial funding method for
deferring the acquisition cost. Actuarial funding uses
coefficients in a way that DAC represent the current
amount of calculated unpaid acquisition costs for each
policy at the balance sheet date.
d) Reserve adequacy test
At the balance sheet date, the Company performed a reserve
adequacy test to verify that the amount of reserves
net of the deferred acquisition costs is adequate. To perform
the test, the current best estimate of future contractual
cash flows and the related costs (such as
administrative expenses and claim settlement costs, including
income from investments backing such reserves)
was used. The life insurance contract portfolio
was split into groups (by technical interest rates). For
each group, representative samples were chosen based
on the status of the insurance portfolio and average parameters
for each group (product). In case of insufficiency,
the Company sets up an additional reserve. The
inadequacy of reserves is recognized in the income
statement of the respective accounting period.
e) Reinsurance assets
Contracts with reinsurers under which the Company is
reimbursed for losses on one or more Company’s contracts
that meet the definition of insurance contracts
are classified as reinsurance contracts. Only the rights
arising from contracts where substantial insurance
risk is transferred (insurance contracts) are recognized
as reinsurance assets. The rights arising from
contracts where no substantial insurance risk is transferred
are accounted for as financial assets.
Reinsurance assets contain short-term amounts due
from reinsurers (classified as loans and receivables),
as well as long-term balances due from reinsurers
(classified as reinsurance assets) that depend on the
expected insurance claims and benefits arising under
the related reinsured insurance contracts. Reinsurance
assets are measured at the same basis as the reserves
set up for the respective insurance contracts
reinsured and in accordance with the terms of individual
reinsurance contracts. Reinsurance liabilities are
primarily reinsurance premiums (assigned insurance
premiums) arising from reinsurance contracts that are
recognized as an expense on the same basis as premiums
from the respective insurance contracts.
The Company assesses its reinsurance assets for impairment
at each balance sheet date. If there is an objective
indication that the reinsurance asset is
impaired, the Company reduces the carrying amount
of the reinsurance asset to its recoverable amount and
recognizes that impairment loss in the income statement.
The Company gathers information about objective
indications that a reinsurance asset is impaired
KONTINUITA ANNUAL REPORT 115