IFA.Solvency2 Flashcards
What does the acronym ENID stand for in the context of Solvency 2?
Events Not In Data
What is the ‘usual’ definition of ENID?
ENID : Event Not in Data
ENID is a low frequency
, high severity event
not captured
in historical data
What is the ‘proposed’ ENID Loading
Purpose of ENID loading is to bring to the best estimate.
Describe how ENID can be identified
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
Identify an example of ENID with an unfavourable outcome
- Catastrophic event in an area where the insurer has material exposure
- Court ruling against the insurer
Identify an example of ENID with a favourable outcome.
- Withdrawal from market of a major competitor
- Court ruling for the insurer
Identify 3 reasons why might it be beneficial for insurers to attempt to identify ENIDs
- Increase
awareness
of potential risks by senior management - Assist in
calculation of loading
using freq/sev methods - Increase
regulator confidence
in company’s risk management