Chapter 2 Key Points Flashcards
requirement for all businesses to be viable
match liabilities with assets, i.e. break-even position
what is the CRR
capital resources requirement, enforced by the PRA, requires insurers to have an additional cushion of assets over and above a break even position
what is the MCR
minimum capital requirement, EU’s legal minimum and a risk based calculation
what does the MCR result in
higher ECR
what is ECR
enhanced capital requirement
what is the ICA
individual capital assessment, required by UK insurers to regularly assess what they think their own capital should be
which model are insurers required to adopt
following solvency II, standard model or seek approval for their own customised internal risk model to calculate capital requirements
what happens if the PRA does not agree with a firms ICA
will provide individual capital guidance (ICG)
why does lack of contract certainty create a risk to all parties to a contract
underwriters need to know what their exposure is
policyholder need to know what cover they have
broker needs to know they have met the needs of the client
define contract certainty
achieved by the complete and final agreement of all the terms between the insured and the insurer by the time that they enter into the contract, with contract documentation provided promptly thereafter
where is contract certainty defined
contract certainty code of practice
why is the FCA interested in contract certainty
it is the regulator of broking and underwriting business for conduct of business issues
