Prudential Regulation Authority Rulebook

15.1

The cash-flow projection used in the calculation of the best estimate must, explicitly or implicitly, take account of all uncertainties in the cash-flows, including all of the following characteristics:

1. (1) uncertainty in the timing, frequency and severity of insured events;
2. (2) uncertainty in claim amounts, including uncertainty in claims inflation, and in the period needed to settle and pay claims;
3. (3) uncertainty in the amount of expenses referred to 9.1(1) of the Technical Provisions Part;
4. (4) uncertainty in expected future developments referred to in 14 to the extent that it is practicable;
5. (5) uncertainty in policyholder behaviour;
6. (6) dependency between two or more causes of uncertainty; and
7. (7) dependency of cash-flows on circumstances prior to the date of the cash-flow.