SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liability adequacy test

All recognised insurance liabilities including provision for outstanding claims are subject to liability adequacy test at each reporting date. This involves comparison of current estimates of all contractual cash flows attached to these liabilities with their carrying amounts. Estimates of contractual cash flows include expected claim handling costs and recoveries from third parties. Any deficiency in carrying amounts is charged to the  income statement by establishing a provision for losses arising from the liability adequacy test.