If an insurer uses tabular discounts, which disclosures are required?

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Multiple Choice

If an insurer uses tabular discounts, which disclosures are required?

When discounting future obligations with a tabular approach, full transparency about what was done is essential. The table used to obtain discount factors must be disclosed so someone else can see exactly which factors were applied and reproduce the calculation. The specific rates or the way the table translates into a rate must be disclosed because the chosen discount rate drives the present-value result and different rates can yield notably different Liabilities. Finally, the resulting discounted liability itself should be shown so readers can see the outcome of applying the discounting method to the future payments. These disclosures together ensure the valuation is transparent, comparable, and auditable. They let regulators, auditors, and readers assess reasonableness, test sensitivities to changes in the discount table or rates, and understand how the discounting affects reported liabilities.

When discounting future obligations with a tabular approach, full transparency about what was done is essential. The table used to obtain discount factors must be disclosed so someone else can see exactly which factors were applied and reproduce the calculation. The specific rates or the way the table translates into a rate must be disclosed because the chosen discount rate drives the present-value result and different rates can yield notably different Liabilities. Finally, the resulting discounted liability itself should be shown so readers can see the outcome of applying the discounting method to the future payments.

These disclosures together ensure the valuation is transparent, comparable, and auditable. They let regulators, auditors, and readers assess reasonableness, test sensitivities to changes in the discount table or rates, and understand how the discounting affects reported liabilities.

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