4. Market Security

Question 1

Solvency

Answer 1

More assets than liabilities

assets > paid claims + unpaid claims + operating costs

Question 2

Assets

Answer 2

Items of value or resources that a business owns and can be tangible or intangible

Question 3

Capital

Answer 3

Investment in the business

Question 4

Liabilities

Answer 4

Money owed

Question 5

Liquidity

Answer 5

Ease with which assets can be turned to cash

Question 6

Loss ratio

Answer 6

Premium:claims

Question 7

Combined ratio

Answer 7

Premium + investment : claims + costs

Question 8

Solvency II

Answer 8

Pan European solvency regime to ensure insurers can pay claims
- Better regulation
- deeper EU integration
- enhanced policyholder protection
- improved EU competitiveness

Question 9

3 requirements of solvency II

Answer 9

Quantitative requirements
Supervisory review
Disclosure

Question 10

Quantitative requirements

Answer 10

Demonstrate adequate financial resource including to business risk

Question 11

Solvency capital requirements

Answer 11

Obligation for insurer to keep assets available in excess of liabilities

Question 12

Minimum capital requirement

Answer 12

Minimum level of available capital

Question 13

Supervisory review

Answer 13

Risk management and risk assessment process owned by senior management

Question 14

Own risk and solvency assessment

Answer 14

Name given to internal risk review taken by insurers

Question 15

Disclosure

Answer 15

EU aim for harmonised supervisory reporting across member states

Question 16

European Insurance and Occupational Pensions Authority

Answer 16

Overarching EU supervisory body of Solvency II

Question 17

Lloyd’s Chain of security

Answer 17

Syndicate level assets
Members’ Funds at Lloyd’s
Central assets

Question 18

Rating agency considerations

Answer 18

Ability to pay claims
Operating performance
Business profile