Skandia Liv has not calculated its capital need and commitments to its customers realistically or correctly for several years. This has entailed that the company’s customer protection and the company’s solvency have not been fairly assessed. Skandia Liv is therefore receiving a warning and an administrative fine of SEK 35 million.
Finansinspektionen (FI) has investigated whether Skandia Liv complied with the rules for calculating its commitments to policyholders – the technical provisions – and the capital the company must set aside to be able to manage the risks in its operations. The investigation also includes the documentation that must be prepared when calculating commitments. FI's investigation covers the period Q4 2016–Q3 2019.
The rules for calculating technical provisions and capital requirements are in place to ensure that insurance companies always value their commitments to their customers correctly and set aside enough capital to meet these commitments. Calculating risks correctly and realistically is key for ensuring that companies have sufficient capital and serves as a central component in the consumer protection on the insurance market.
For several years, Skandia Liv has used an inaccurate assumption of the risk of premature termination of insurance policies, so-called lapse. As a result, the company has not correctly and realistically calculated both its commitments and the capital set aside for these commitments, thereby impeding a fair assessment of the protection for customers and the company's solvency. The documentation for the calculation of commitments also demonstrated deficiencies that further impeded such an assessment.
Skandia Liv's failure over a long period of time to correctly apply the rules is serious. However, the company has taken measures to rectify the deficiencies and FI therefore has decided that Skandia Liv will receive a warning and an administrative fine of SEK 35 million.