IFA.Solvency2 Flashcards

1
Q

What does the acronym ENID stand for in the context of Solvency 2?

A

Events Not In Data

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2
Q

What is the ‘usual’ definition of ENID?

ENID : Event Not in Data

A

ENID is a low frequency, high severity event not captured in historical data

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3
Q

What is the ‘proposed’ ENID Loading

A

Purpose of ENID loading is to bring to the best estimate.

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4
Q

Describe how ENID can be identified

A

Bring together parties who understand the insurer’s exposure.

Their discussion should include factors affecting:

  • future settlements of past events
  • potential future claims relating to current exposures

SPECIFIC events to consider may include:
- catastrophes, court awards, legislative changes

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5
Q

Identify an example of ENID with an unfavourable outcome

A
  1. Catastrophic event in an area where the insurer has material exposure
  2. Court ruling against the insurer
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6
Q

Identify an example of ENID with a favourable outcome.

A
  1. Withdrawal from market of a major competitor
  2. Court ruling for the insurer
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7
Q

Identify 3 reasons why might it be beneficial for insurers to attempt to identify ENIDs

A
  1. Increase awareness of potential risks by senior management
  2. Assist in calculation of loading using freq/sev methods
  3. Increase regulator confidence in company’s risk management
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