Q115 The current non proportional reinsurance factor USP method is easy to

Q115 the current non proportional reinsurance factor

This preview shows page 41 - 43 out of 66 pages.

Q11.5 The current non-proportional reinsurance factor USP method is easy to calculate, but almost not risk-sensitive at all. Suggestion: Split the non-proportional property reinsurance into a) non-proportional reinsurance covering natural catastrophes (windstorm, earthquake, flood, hail, subsidence; I.E. Cat-XL per event) b) non-proportional reinsurance covering other accumulated losses of many single claims (I.E. aggregate XL or stop- loss) c) non-proportional reinsurance covering large single risks (XL per risk) Q11.6 Q11.7 Other than the issues common to the USP framework (methodology and formula imposed by EIOPA, data criteria), the main difficulty related to the application of GSP is to demonstrate that the nature of the group business and its risk profile are similar enough to those of the individual undertakings providing the data Q11.8 An alternative method could be to calculate USPs at an entity level and then allow an aggregation of these USPs to obtain the GSP. EIOPA should give guidelines on the aggregation method. Q11.9 We have not identified a risk on which specific parameters could be applied only at the group level and not at the Template comments 41/66
Image of page 41

Subscribe to view the full document.

Comments Template on Discussion Paper on the review of specific items in the Solvency II Delegated Regulation Deadline 3 March 2017 23:59 CET solo level. Q12.1 Q12.2 Q12.3 Counterparty Default Risk: Overdue Premiums There is some ambiguity about what is meant by the premium “due date” when calculating counterparty default risk on overdue premiums. The ambiguity arises where premiums are collected by an intermediary and later remitted to the insurer. The question is what the “due date” of the premium is: is it the date the premium is paid by the customer to the intermediary, or the date the intermediary is due to pass it on to the insurer. If the latter date is used, then there is arguably a credit risk that is not captured by the Standard Formula. There is also the possibility for insurers who use fellow group companies as intermediaries to game the system by allowing the intermediary to hold onto premiums for an extended period: effectively an inter-group loan which attracts no credit risk in the Standard Formula Counterparty Default Risk: Premium receivables from rated counterparties These are “policyholder debtors” and as such are designated as Type 2 exposures under item 3(b) of Article 189 of the Delegated Acts. However, where these are rated corporates they have all the characteristics of Type 1 exposures. We would suggest that the appropriate treatment is Type 1, (analogous to the treatment of lines of business reflecting the underlying risk as per Article 55 of the Delegated Acts). A particular subset of this scenario is reinsurance premium receivable from reinsurance cedants; these are at the same time Type 1 under item 2(a) of Article 189 of the Delegated Acts and Type 2 under item 3(b) of Article 189 of the Delegated Acts.
Image of page 42
Image of page 43
  • Winter '14

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes