My first Publication ocbc_ar17_fullreport_english | Page 243

39. RISK MANAGEMENT (continued)
39.5 INSURANCE-RELATED RISK MANAGEMENT (continued)
Insurance risk (continued)
(ii) Non-life insurance contract liabilities, net of reinsurance of liabilities for 2017
$ million
2010 2011 2012 2013 2014 2015 2016 2017
(a) Estimate of cumulative claims
Accident Year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Current estimate of cumulative claims 46
60
59
57
54
53
52
51
51 73
78
61
59
55
55
53
–
53 64
70
67
65
63
62
–
–
62 93
74
72
71
69
–
–
–
69 81
77
76
75
–
–
–
–
75 83
79
75
–
–
–
–
–
75 91
85
–
–
–
–
–
–
85 93
–
–
–
–
–
–
–
93
(b) Cumulative payments
Accident Year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments 21
44
48
50
51
51
51
51
51 25
44
49
51
52
52
52
–
52 32
50
56
59
60
60
–
–
60 30
55
61
63
65
–
–
–
65 32
59
65
67
–
–
–
–
67 30
56
62
–
–
–
–
–
62 41
66
–
–
–
–
–
–
66 44
–
–
–
–
–
–
–
44
# 1 2 4 8 13 19 49
(c) Non-life net claim liabilities
Reserve for prior years
Unallocated surplus
General Insurance Fund Contract
Liabilities, net
(1)

Total
96
15
(1)
110
# represents amounts less than $0.5 million.
Key assumptions
Non-life insurance contract liabilities are determined based on previous claims experience, existing knowledge of events, the terms and
conditions of the relevant policies and interpretation of circumstances. Of particular relevance is past experience with similar cases,
historical claims development trends, legislative changes, judicial decisions, economic conditions and claims handling procedures. The
estimates of the non-life insurance contract liabilities are therefore sensitive to various factors and uncertainties. The actual future
premium and claims liabilities will not develop exactly as projected and may vary from initial estimates.
Insurance risk of non-life insurance contracts is mitigated by emphasising diversification across a large portfolio of insurance contracts
and geographical areas. The variability of risks is improved by careful selection and implementation of underwriting strategies, which
are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits. This is largely achieved through
diversification across industry sectors and geography. Further, strict claim review policies to assess all new and ongoing claims, regular
detailed review of claims handling procedures and frequent investigation of possible fraudulent claims are put in place to reduce the
risk exposure of GEH Group. GEH Group further enforces a policy of actively managing and prompt pursuing of claims, in order to
reduce its exposure to unpredictable future developments that can negatively impact the Group.
GEH Group has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the use of reinsurance
arrangements in order to limit exposure to catastrophic events, e.g. hurricanes, earthquakes and flood damages.
BUILDING ON OUR CORPORATE STRATEGY FOR SUSTAINABLE GROWTH
241