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Notes to the Group’s financial statements

27 Liabilities from insurance and investment contracts
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P&C insurance
                 
Change in insurance liabilities
      2012 2011
EURm Gross Ceded Net Gross Ceded Net
Provision for unearned premiums            
  At 1 Jan. 1,972 53 1,919 1,845 53 1,792
  Exchange differences 56 1 57 20 1 20
  Change in provision 79 1 81 106 -1 107
  At 31 Dec. 2,107 55 2,053 1,972 53 1,919
                 
      2012 2011
EURm Gross Ceded Net Gross Ceded Net
Provision for claims outstanding            
  At 1 Jan. 7,576 476 7,100 7,494 457 7,037
  Disposed insurance holdings -1 0 -1 - - -
  Exchange differences 199 12 187 34 5 29
  Change in provision -27 35 -62 48 14 34
  At 31 Dec. 7,747 522 7,225 7,576 476 7,100
                 
Liabilities from insurance contracts
                 
EURm         2012 2011
  Provision for unearned premiums         2,107 1,972
  Provision for claims outstanding         7,747 7,576
    Incurred and reported losses         2,050 2,037
    Incurred but not reported losses (IBNR)         3,573 3,485
    Provisions for claims-adjustment costs         275 269
    Provisions for annuities and sickness benefits         1,849 1,785
P&C insurance total       9,854 9,547
                 
Reinsurers' share            
  Provision for unearned premiums         55 53
  Provision for claims outstanding         522 476
    Incurred and reported losses         401 328
    Incurred but not reported losses (IBNR)         121 148
Total reinsurers' share         577 528
                 
As the P&C insurance is exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading.
                 
Claims cost trend of P&C insurance
                             
The tables below show the cost trend for the claims for different years. The upper part of the tables shows how an estimate of the total claims costs per claims year evolves annually. The lower section shows how large a share of this is presented in the balance sheet.
                             
More information on P&C insurance's insurance liabilities in the Risk Management section of the Annual accounts.
                             
Claims costs before reinsurance
                             
Estimated claims cost
                             
EURm < 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
  At the close of the claims year 5,181 2,665 2,604 2,774 2,789 2,853 3,015 3,026 3,149 3,231 3,251  
  One year later 5,414 2,622 2,567 2,715 2,774 2,851 2,967 2,973 3,191 3,359    
  Two years later 5,515 2,537 2,501 2,659 2,744 2,814 2,904 2,940 3,134      
  Three years later 5,599 2,527 2,495 2,630 2,739 2,778 2,874 2,894        
  Four years later 5,698 2,507 2,477 2,595 2,696 2,730 2,847          
  Five years later 5,738 2,488 2,449 2,558 2,644 2,702            
  Six years later 5,741 2,475 2,406 2,501 2,610              
  Seven years later 5,831 2,488 2,369 2,475                
  Eight years later 5,930 2,463 2,329                  
  Nine years later 5,993 2,439                    
  Ten years later   5,998                      
                             
Current estimate of total claims costs 5,998 2,439 2,329 2,475 2,610 2,702 2,847 2,894 3,134 3,359 3,251 34,039
Total disbursed 3,630 2,202 2,078 2,208 2,314 2,352 2,419 2,439 2,602 2,617 1,720 26,581
                             
Provision reported in the balance sheet 2,368 237 251 267 296 350 428 455 533 742 1,531 7,458
                             
of which established vested annuities 1,325 67 51 66 68 67 64 54 51 27 9 1,849
                             
Other provision                   14
                             
Provision for claims-adjustment costs                   275
                             
Total provision reported in the BS               7,747
                             
                             
Claims costs after reinsurance
                             
Estimated claims cost
                             
EURm < 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
  At the close of the claims year 4,549 2,539 2,529 2,622 2,675 2,750 2,887 2,901 2,991 3,052 3,041  
  One year later 4,769 2,487 2,491 2,556 2,649 2,741 2,853 2,866 3,040 3,132    
  Two years later 4,875 2,408 2,426 2,499 2,618 2,714 2,794 2,832 2,997      
  Three years later 4,938 2,397 2,419 2,478 2,621 2,679 2,765 2,801        
  Four years later 5,021 2,376 2,405 2,445 2,580 2,633 2,742          
  Five years later 5,053 2,358 2,376 2,408 2,534 2,606            
  Six years later 5,052 2,346 2,333 2,366 2,502              
  Seven years later 5,090 2,359 2,299 2,341                
  Eight years later 5,207 2,339 2,260                  
  Nine years later 5,267 2,321                    
  Ten years later   5,282                      
                             
Current estimate of total claims costs 5,282 2,321 2,260 2,341 2,502 2,606 2,742 2,801 2,997 3,132 3,041 32,025
Total disbursed 2,991 2,097 2,022 2,084 2,217 2,272 2,324 2,368 2,537 2,488 1,688 25,089
                             
Provision reported in the balance sheet 2,291 224 238 257 285 334 418 434 459 4,939 7,587 6,936
                             
of which established vested annuities 1,325 67 51 66 68 67 64 54 51 27 9 1,849
                             
Other provision                       14
                             
Provision for claims-adjustment costs                       275
                             
Total provision reported in the BS               7,225
                             
Life insurance
               
Change in liabilities arising from other than unit-linked insurance and investment contracts
EURm       Insurance
contracts
Investment
contracts
Total
  At 1 Jan. 2012       4,242 7 4,249
  Premiums     172 0 172
  Claims paid     -425 -1 -426
  Expense charge     -38 0 -38
  Guaranteed interest     148 0 148
  Bonuses     3 0 3
  Other     -37 -1 -38
  At 31 Dec. 2012     4,065 6 4,071
  Reinsurers' share   -3 0 -3
  Net liability at 31 Dec. 2012   4,062 6 4,067
               
EURm       Insurance
contracts
Investment
contracts
Total
  At 1 Jan. 2011       4,388 22 4,410
  Premiums     204 1 206
  Claims paid     -438 -17 -455
  Expense charge     -37 0 -37
  Guaranteed interest     153 0 153
  Bonuses     6 0 6
  Other     -34 0 -34
  At 31 Dec. 2011     4,242 7 4,249
  Reinsurers' share   -3 0 -3
  Net liability at 31 Dec. 2011   4,239 7 4,245
               
               
Change in liabilities arising from unit-linked insurance and investment contracts
EURm       Insurance
contracts
Investment
contracts
Total
  At 1 Jan. 2012       2,216 838 3,054
  Premiums     421 389 810
  Claims paid     -165 -123 -289
  Expense charge     -32 -14 -46
  Other     225 79 303
  At 31 Dec. 2012     2,665 1,168 3,833
               
  At 1 Jan. 2011       2,381 743 3,124
  Premiums     339 310 649
  Claims paid     -196 -157 -354
  Expense charge     -31 -12 -43
  Other     -277 -44 -321
  At 31 Dec. 2011     2,216 838 3,054
               
The liabilities at 1 Jan. and at 31 Dec. include the future bonus reserves and the effect of the reserve for the decreased discount rate. The calculation is based on items before reinsurers' share. A more detailed specification of changes in insurance liabilities is presented in Group's Risk Management.
               
EURm       2012 2011
Insurance contracts          
Liabilities for contracts with discretionary participation feature (DPF)    
  Provision for unearned premiums 2,090 2,219
  Provision for claims outstanding 1,972 2,020
Liabilities for contracts without discretionary participation feature (DPF)    
  Provision for unearned premiums     0 0
  Provision for claims outstanding     1 0
  Total     4,063 4,240
               
Assumed reinsurance        
  Provision for unearned premiums     1 1
  Provision for claims outstanding     1 1
  Total     2 2
               
Insurance contracts total        
  Provision for unearned premiums 2,091 2,220
  Provision for claims outstanding 1,975 2,022
  Total     4,065 4,242
               
Investment contracts        
Liabilities for contracts without discretionary participation feature (DPF)    
  Vakuutusmaksuvastuu     6 7
               
Liabilities for insurance and investment contracts total      
  Provision for unearned premiums 2,096 2,227
  Provision for claims outstanding 1,975 2,022
Life insurance total   4,071 4,249
               
Reinsurers' share        
  Provision for unearned premiums 0 0
  Provision for claims outstanding     -3 -3
  Total     -3 -3
               
Investment contracts do not include a provision for claims outstanding.
               
Liability adequacy test does not give rise to supplementary claims.
               
Exemption allowed in IFRS 4 Insurance contracts has been applied to investment contracts with DPF or contracts with a right to trade-off for an investment contract with DPF. These investment contracts have been valued like insurance contracts.
               
EURm         2012 2011
Group Total     13,925 13,796