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Contract Boundaries

Calculate the Boundary Net Cash Flow, Boundary Inclusion Ratio, and Excluded Premium Share instantly.

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Boundary Net Cash Flow

€63 000 000

1Step 1

Premiums Within Boundary

Premiums Within Boundary=Total Future Premiums−Premiums Outside Boundary\textit{Premiums Within Boundary} = \textit{Total Future Premiums} - \textit{Premiums Outside Boundary}
2Step 2

Claims Within Boundary

Claims Within Boundary=Total Future Claims−Claims Outside Boundary\textit{Claims Within Boundary} = \textit{Total Future Claims} - \textit{Claims Outside Boundary}
3Step 3

Expenses Within Boundary

Expenses Within Boundary=Total Future Expenses−Expenses Outside Boundary\textit{Expenses Within Boundary} = \textit{Total Future Expenses} - \textit{Expenses Outside Boundary}
4Step 4

Obligations Within Boundary

Obligations Within Boundary=Claims Within Boundary+Expenses Within Boundary\textit{Obligations Within Boundary} = \textit{Claims Within Boundary} + \textit{Expenses Within Boundary}
5Step 5

Boundary Net Cash Flow

Boundary Net Cash Flow=Obligations Within Boundary−Premiums Within Boundary\textit{Boundary Net Cash Flow} = \textit{Obligations Within Boundary} - \textit{Premiums Within Boundary}
6Step 6

Boundary Inclusion Ratio

Boundary Inclusion Ratio=Obligations Within BoundaryTotal Future Claims+Total Future Expenses\textit{Boundary Inclusion Ratio} = \frac{\textit{Obligations Within Boundary}}{\textit{Total Future Claims} + \textit{Total Future Expenses}}
7Step 7

Excluded Premium Share

Excluded Premium Share=Premiums Outside BoundaryTotal Future Premiums\textit{Excluded Premium Share} = \frac{\textit{Premiums Outside Boundary}}{\textit{Total Future Premiums}}

Understand the Contract Boundaries

Overview

This calculator implements the Contract Boundaries Engine within the undertaking's technical provision valuation framework.[1] The engine 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 Engine 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/S.17.01 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 and the management-reporting packs. [2]

Sources

  1. Delegated Regulation (EU) 2015/35 - Art. 18 (Boundaries of an insurance contract) - EUR-Lex
  2. Commission Implementing Regulation (EU) 2015/2450 - QRT S0201 (Balance sheet) - EUR-Lex

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.