According to Chapter 13, Section 2 of the Insurance Companies Act, life insurance companies must distribute a reasonable amount of the surplus generated by insurance contracts to those policies that, according to the agreement terms, are entitled to additional bonuses. The distribution of bonuses may not, however, jeopardise the company's solvency and the continuity of the bonus level.
The total bonus payable on insurance savings consists of the technical rate of interest and additional bonuses determined annually. The company's Board of Directors decides on the additional bonuses annually, and their amount is affected by the general interest rate level, success of investment operations and the technical rate of interest. The company aims at continuity with respect to the level of additional bonuses. The company's capital adequacy and provisions for higher-than-estimated claims incurred may limit the customer bonuses payable.
The aim is to pay out a total bonus on insurance savings that in the long term corresponds to the yield level of fixed income investments with the lowest risk at minimum. At present, the targeted bonus level corresponds to the 12-month Euribor for endowment insurance and capital redemption contracts, the yield on Finnish 5-year government bonds for individual pension insurance and defined-contribution group pension insurance and the yield on Finnish 10-year government bonds for defined-benefit group pension insurance.
In term life insurance surplus may be generated if the premiums exceed the claims paid out based on term life insurance and the operating expenses needed for their management. Based on the surplus, the insurance cover can be increased or the premiums payable on the cover can be reduced.
These targets are in force until further notice. The targets are not part of the insurance contract concluded between the company and the policyholder. The Board of Directors of OP Life Assurance Company has the right to change the targets without a separate notification to the policyholder.