Contract Boundaries

Calculate the Boundary Net Cash Flow instantly.

Cashflow Class	Total Future Cashflow	Outside Boundary	Within Boundary
Premiums	Premiums total future cashflow€	Premiums outside boundary€	€90 000 000
Claims	Claims total future cashflow€	Claims outside boundary€	€135 000 000
Expenses	Expenses total future cashflow€	Expenses outside boundary€	€18 000 000

In-Boundary Obligations

€153 000 000

Raw Boundary Net Cashflow

€63 000 000

Recognized Boundary Net Cashflow

€63 000 000

Unilateral Termination Right

Risk-Reflective Repricing Right

Repricing Horizon

Assessment Controls Passed

Obligations Within Boundary

€153 000 000

Claims Within Boundary

€135 000 000

Expenses Within Boundary

€18 000 000

Raw Boundary Net Cash Flow

€63 000 000

Obligations Within Boundary

€153 000 000

−

Premiums Within Boundary

€90 000 000

Boundary Net Cash Flow

€63 000 000

Raw Boundary Net Cash Flow

€63 000 000

Legal Enforceability Gate

Pass

Boundary Inclusion Ratio

84.07%

In-Boundary Obligations Share

84.07%

Legal Enforceability Gate

Pass

1Step 1

Determine whether the undertaking can reassess, reprice, or terminate

Gate = Controls \times \max(Right_{terminate/reprice},\;Horizon_{\le 12m})

2Step 2

Separate each future cashflow class into in-boundary and outside-boundary amounts

CF_{in} = CF_{total} - CF_{outside}

3Step 3

Calculate in-boundary obligations and raw boundary net cashflow

NCF_{raw} = (Claims_{in}+Expenses_{in}) - Premiums_{in}

4Step 4

Recognize boundary net cashflow only when the legal enforceability gate passes

NCF_{boundary} = NCF_{raw} \times Gate

Understand the Contract Boundaries

Overview

This calculator implements the Contract Boundaries Calculator within the undertaking's technical provision valuation framework.^[1] The calculator is defined as the technical driver responsible for determining the specific date at which the undertaking's insurance obligations and future-premium-rights terminate for Solvency II purposes.

Input Terms

Unilateral Termination Right: The flag identifying if the undertaking has the right to terminate the contract or amend the premiums/benefits.^[1]
Renewal Basis: The distinction between tacit renewals and formal new contract-issuance.
Economic Obligation: The point beyond which the undertaking is no longer exposed to future risk for the current premium-price.

Technical Rationale

The Contract Boundaries Calculator is a fundamental component of the undertaking’s technical provision valuation. It ensures the undertaking’s future cash-flow projections are correctly limited to the period in which the undertaking has a legal obligation to provide insurance-coverage.

The calculation performs a logical-test on the contract terms to identify the "boundary date". Any cash flows occurring after this date (e.g., future renewals) are excluded from the Best Estimate Liability (BEL). This ensures the undertaking’s solvency position is not artificially inflated by future profits that are not legally guaranteed. The results feed the Technical Provisions and S.12.01.01/S.12.01.02/S.17.01.01/S.17.01.02 reporting views.

Important Notes

Short-Term Contracts: For most non-life contracts, the boundary is typically the next annual renewal date.
Reporting: The displayed result is intended to support the valuation-disclosure components feeding the S.02.01.01/S.02.01.02 balance-sheet templates and the management-reporting packs. ^[2]

Sources

Default values are illustrative sample inputs for navigation, training, and QA. Replace them with controlled data before using the result in capital analysis, governance, or reporting decisions.