NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended 31 December 2022 Type of contract Terms and conditions Motor Covers damage or loss resulting from the possession, use or ownership of motor vehicles operating on land, excluding railway rolling stock and warranty business. Property Covers damage to or loss resulting from the possession, use or ownership of property, other than business covered under other classes indicate in the Insurance Act, 2017. Legal expense Covers legal expenses in costs of litigation. Transport Covers damage or loss resulting from the conveyance, storage, treatment and handling of goods in transit, irrespective of the form of transit. Liability Covers liability to another person, including professional indemnity. Accidental and health Covers costs or loss of income resulting from a disability or death event caused by an accident or a health event other than costs or services regulated under the Medical Schemes Act, 1988. Reinsurance Proportional reinsurance in respect of professional indemnity liability business (until June 2022). Insurance contracts – Long-term a. Frequency and severity of claims The most significant factors that could increase the overall frequency of mortality and morbidity claims are diseases (such as Aids), epidemics (such as Covid-19), economic conditions, abnormal weather conditions, quality of healthcare and widespread changes in lifestyle, such as eating, smoking and exercise habits, resulting in earlier or more claims than expected. The Group has comprehensive claims assessing processes and protocols in terms of which all claims received are assessed. Delegation of authority levels are applied to ensure that larger claims and repeat claims are assessed by senior assessors and management, and the forensics team if required, before being paid. The Group also conducts regular claims investigations to monitor experience. The Group manages these risks through its underwriting strategy. The underwriting strategy ensures that the risks accepted are in line with PPS’s risk appetite. Medical risk selection is included in the underwriting protocols. Premium loadings and benefit exclusions may be imposed which reflect the health and medical history of the applicant. The Group has maximum exposure limits in respect of any single life insured. Maximum exposures are determined relative to gross professional income to ensure that policyholders are not overinsured. These limits are increased annually in line with expected salary inflation for professionals. Policyholders are reminded each year of their benefits and asked to review these benefits to ensure they are not over insured relative to their income as this may impact on future claims. In some instances, maximum exposures are not increased annually where not appropriate. Where appropriate, reinsurance contracts are in place to limit the Group’s liability. There is a Board approved reinsurance strategy in place, which is regularly reviewed by the Group Actuarial Committee for its ongoing 39. Management of risks (continued) 39.2 Insurance product risk management (continued) 174 Notes to the Consolidated Financial Statements
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