The Prime Ministry Undersecretariat of the Treasury (“Treasury”) recently amended the Regulation for Measurement and Evaluation of Capital Adequacy of Insurance, Reassurance and Pension Companies (the “Regulation“). The amendments were published in the Official Gazette No. 30121 on July 11, 2017, and entered into force on the same date.
Overview of the Amendments
Article 8 of the Regulation regulates the calculation of the capital adequacy for insurance, reassurance and pension companies (the “Companies”). Accordingly, the capital adequacy for the Companies was calculated by considering active risk, reassurance risk, outstanding indemnity, foreign currency risk, underwriting risk and excessive increase in premium risk. With the amendment, the excessive increase of premium risk will no longer be a determinant.
There are a number of cure periods for the Companies’ capital adequacy-related obligations. Previously, the Treasury had discretion to extend the given periods for public companies. This extension is now available to private companies as well.
The excessive increase of premium risk is no longer factored in when calculating capital adequacy and the Treasury is able to provide some flexibility to private Companies as well.