Glossary beginning with T

Technical provision

Provisions which should ensure full coverage of all current and future liabilities that may arise from insurance contracts. Technical provisions include in particular: provision for unearned premiums, provision for outstanding claims, provision for unexpired risks, provision where the investment risk is born by the policyholders, provision for bonuses and rebates.

Technical rate

Interest rate used to discount technical provisions in life insurance and provisions for capitalized annuities in third party liability insurance.

According to the Finance Minister’s regulation of 28 December 2009 on the special accounting standards for insurance and reinsurance undertakings, the technical rates used by an insurance undertaking may not be higher than 80% of the weighted-average rate of return on investments covering technical provisions during the most recent three financial years.

The Polish Financial Supervision Authority (KNF) calculates and announces the maximum technical rate by 31 January of every year.