IPSB Gross Premium Contractual Method

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As part of the Integrated Prudential Sourcebook, firms with conventional with-profits business can switch from a net premium method of calculating mathematical reserves to a gross premium contractual method.

The effect of this is for reserves to represent a prudent assesment of contractual benefits. Key within this is that yearly bonuses will not not have to be included in this figure. For many with-profits companies this will reduce the amount of reserves it has to hold.

The software to calculate the mathematical reserves using the Gross Premium Contractual Method is normally an Actuarial Modelling System such as Prophet or MoSeS . These systems can calculate on a policy by policy basis, but to get them capable takes some up front Actuarial development.