The Solvency Capital Requirement

Maria Grazia Starita and Irma Malafronte

Chapter 3 in Capital Requirements, Disclosure, and Supervision in the European Insurance Industry, 2014, pp 61-120 from Palgrave Macmillan

Abstract: Abstract This chapter provides a deep analysis of the first pillar of the European regulatory framework on capital requirements for the insurance industry and has six main goals: describing the principles for the assessment of insurers’ assets, liabilities, and own funds according to the first pillar of Solvency II (Directive 2009/138/EC), and in order to estimate the new capital requirements; identifying the role and the characteristics of the solvency capital requirement (SCR), that is the level of capital requirement that is able to face all quantifiable risks to which an insurer is exposed; comparing the principles of Solvency II with the ones from the economic theory; identifying the role and the characteristics of the minimum capital requirement (MCR), that is the level of capital requirement for which, when going below it, policyholders and beneficiaries are exposed to an unacceptable level of risk; identifying the main causes of an insurer’s insolvency and the risks for policyholders and beneficiaries involved in the insurance processes; estimating the new capital requirements for a sample of insurers identified in Section 2.3.

Keywords: Credit Risk; Catastrophe Risk; Capital Requirement; Market Risk; Risk Margin (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-39084-4_3

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DOI: 10.1057/9781137390844_3

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