IFA. Solvency2 Flashcards
principles- based insurance regulatory system to determine the required capital levels of insurance companies in EU
What does ENID stand for in the context of Solvency2?
Events Not In Data
What is the usual definition of ENID?
high severity, low probability events (often not in historical data)
What is the proposed definition of ENID
= purpose of ENID
the balancing amount required to bring the best estimate before ENID up to an amount allowing for all possible future outcomes
how would ENID loadings vary under the proposed definition?
by
- nature of risks underwritten
- insurer’s reserving policy
describe how ENID can be identified
- bring parties together who understand insurer’s exposure
- their discussions should include factors affecting:
- further settlements in past events
- potential future claims relating current exposures
- specific events to consider may include:
- CAT, court awards, legislative changes
identify an example of ENID with an unfavorable outcome
- CAT event in an area where the insurer has material exposure
- a court ruling against the insurer
identify an example of ENID with a favorable outcome
- withdrawal from market of a major competitor
- a court ruling for the insurer
why might it be beneficial for insurers to attempt to identify ENIDs
may (爱ACAC: I-AC AC: Increase Awareness and Confidence, Assist Calculation)
- increase awareness of potential risks by SM
- assist in calculation of loading using frequency/severity methods
- increase regulator confidence in company’s risk management
What is Solvency 2?
It is a principles based insurance regulatory system to determine the required capital levels of insurance companies in the EU
What are the 3 pillars of Solvency 2?
GTQ (lGbTQ)
- Quantitative: sets SCR and MCR (Solvency CapReq & Min CapReq)
- Governance: supervisory activities (internal control& risk management, supervisory review process)
- Transparency: supervisory reporting & public disclosure
