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NOTES TO THE
FINANCIAL STATEMENTS

for the financial year ended 31 december 2020 (continUed)

50 TAkAFUL RISk MANAGEMENT (CONTINUED)
(b) General Takaful Fund (continued)
Sensitivities
the General takaful claim liabilities are sensitive to the above key assumptions and any changes to these assumptions
may impact the liabilities and operating surplus of the General takaful fund significantly. it has not been possible to
quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process.
inteGrated annUal rePort 2020 the analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held

constant, showing the impact on gross and net liabilities and operating surplus. the correlation of assumptions will have
a significant effect in determining the ultimate claims liabilities. however, in order to demonstrate the impact arising
from changes in assumptions, these assumptions had to be changed on an individual basis. it should also be noted that
movement in these assumptions are non-linear.
the key assumptions to which the estimation of actuarial liabilities is particularly sensitive to the followings:
– Fire loss ratio for latest accident year
this is significant as fire portfolio is one of the largest under general business, a change in loss ratio estimate will
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impact the liabilities significantly.
– Motor Act loss ratio for latest accident year
bimb holdinGS berhad 199701008362 (423858-X) – Average claim cost
motor act business is long term in nature, and would take years before experiencing claim incidents. a significant
impact may result if the ultimate experience differs from current estimation.

reserves are based on the assumption that historical average claim cost is reflective of the potential future experience.
increase in average cost will have an impact on future liabilities.
– Average claim frequency
reserves are based on the assumption that historical average claim number in each accident year is reflective of the
potential future experience. a change in average number of claims will have an impact on future liabilities.

– Average claim settlement period
reserves are based on the assumption that claim settlement period is expected to be stable over the years. a change
in claim handling practice will have an impact on claim cost and future liabilities.