Výročná správa 2009 - Komunálna Poisťovňa

(All amount are in thousands of Euros, unless stated otherwise)4. Management of insurance and financial riskThe Company issues contracts that transfer insurance risk or financial risk, or both. This sectionsummarises these risks and the way the Company manages them.4.1 Insurance riskThe risk of insurance contracts relates to the fact that it is not clear whether or when an insuranceevent will occur, or how big the related claim will be. It is evident from the nature of aninsurance contract that such risk is incidental and cannot be predicted.In the case of insurance contracts that were valued using the probability theory, the main riskthe Company is facing is that the amount of insurance claims may be higher than the related insurancereserves. This may occur if the amount or significance (as to the amount of insurance claim)of actually occurred insured events is higher than originally assumed. Insured events are random,and the actual number and the actual number and amount of claims and benefits will vary fromyear to year from the level calculated using statistical techniques.Experience shows that the larger the portfolio of similar insurance contracts, the smaller therelative variability about the expected outcome will be. In addition, a more diversified portfolio isless likely to be affected by a change in any subset of the portfolio. The Company has developedits own insurance underwriting strategy to diversify the type of insurance risks accepted, and hasworked within each of these categories to achieve a sufficiently large population of risks to reducethe variability of the expected outcome.Factors affecting the insurance risk include insufficient diversification of risk in view of its typeand size, geographical location, and the type of the industrial sector.4.1.1 Long-term life insuranceVolume and significance of insurance claimsFor insurance contracts with the insurance risk being death, the most significant factors thatmight increase the overall frequency of claims include epidemics or lifestyle changes, such aseating habits, smoking, or regular sporting activities, that may result in earlier or more claimsthan expected. For insurance contracts with the insurance risk being survival, the most significantfactors are the progress in medical sciences and improvements in social conditions prolonging thelength of life. For the time being, these risks do not affect the Company materially.For contracts with DPF, a certain portion of the insurance risk is shared with the insured party,which is due to the nature of these insurance contracts. The insurance risk is also affected bythe policyholders’ right to pay lower or no future insurance premiums, to terminate the contractcompletely, or to exercise a guaranteed annuity option. As a result, the amount of the insurancerisk is also subject to policyholder’s behaviour. Provided that policyholders will make reasonabledecisions, the overall insurance risk may be increased by such behaviour. For example, it is likelythat policyholders whose health has deteriorated significantly will be less willing to terminate contractsinsuring death benefits than those staying in good health.The Company manages these risks through its underwriting strategy and adequate reinsurancearrangements.A medical check-up is required, depending on the amount of the insurance sum for death ordisability benefits. A medical check-up is required when the insurance sum is higher than EUR50,000. If the insurance sum is lower than EUR 50,000, it is sufficient to fill in a questionnairerelated to the insurance agreement.Ročná účtovná závierka a komentár I Company AccountsThe underwriting strategy is intended to ensure that the risks underwritten are well diversifiedin terms of the type of risk and the level of insured benefits. For example, the Company balancesdeath risk and survival risk through its portfolio. Medical selection is also included in the Compa­139