PPS Integrated Report 2021 199 | Notes to the Consolidated Financial Statements b. Sources of uncertainty in the estimation of future benefit payments and premium receipts Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts arises from the unpredictability of long-term changes in overall levels of mortality and morbidity and the variability in contract holder behaviour. The Group uses appropriate base tables of standard mortality and morbidity rates. An investigation into the actual experience of the Group over the last or previous year is carried out, to produce a best estimate of the expected morbidity and mortality for the future. The best estimate of future mortality is based on standard industry tables adjusted for the Group’s overall experience and where no such table exists, tables are developed specifically on PPS historic experience. Lapse experience can have a significant impact on the Group. To manage lapse risk, the Group conducts monthly lapse analyses for each of the product lines. Where experience is worse than long-term valuation expected lapse experience management intervention is taken, over and above normal ongoing retention efforts to reduce overall lapse and exits. Risk exposure and concentrations of risk The following table shows the Group’s exposure to insurance risk (based on the carrying value of the long-term insurance liabilities at the reporting date) per category of business. The table also shows the extent to which the Group has mitigated this risk by reinsurance: Non-DPF DPF Group component of component of 2021 insurance insurance R'm liabilities liabilities Total South Africa Gross 4 978 31 667 36 645 Net of reinsurance 4 939 31 667 36 606 Namibia Gross 319 1 290 1 609 Net of reinsurance 315 1 290 1 605 Non-DPF DPF Group component of component of 2020 insurance insurance R'm liabilities liabilities Total South Africa Gross 4 781 28 101 32 882 Net of reinsurance 4 835 28 101 32 936 Namibia Gross 340 1 104 1 444 Net of reinsurance 337 1 104 1 441
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