Section 37, The Insurance Act, 2016

(1) An insurer shall establish and maintain in respect ofeach class of insurance business- (a) reserves for unexpired risks; (b) reserves for outstanding claims; and (c) contingency reserves to cover fluctuations in securities and variations in statistical estimates. (2) An insurer shall maintain in respect of insurance business other than life insurance business– (a) in the case of insurance business other than marine insurance business, the reserves for unexpired risks amounting to not less than forty-five percent of the total net premiums; 28 29 Alterations in particulars to be reported. Margin of solvency. Life insurance fund and its control. Reserves. (b) in the case of marine hull insurance business the reserves for unexpired risks amounting to not less than seventy-five percent of the net premiums; (c) in the case of reserves for outstanding claims, the reserves shall be equal to the total estimated amount of all outstanding claims together with a further amount representing twenty percent of the estimated amount of outstanding claims in respect of claims incurred but not reported at the end of the last preceding year; and (d) in the case of contingency reserves, reserves shall not be less than three percent of the total premiums or twenty percent of the net profits whichever is the greater; and such amount shall accumulate until it reaches the minimum paid-up capital or fifty percent of the net premiums, whichever is the greater. (3) An insurer shall maintain with respect to the life insurance business– (a) a general reserves fund which shall be credited with an amount equal to the net liabilities on policies in force at the time of the actuarial valuation; and (b) contingency reserves which shall be credited with an amount equal to one percent of the premiums.