IFA.SOLVENCY2 Flashcards

1
Q

what does the acronym ENID stand for in the context of Solvency 2

A

Events Not In Data

high-severity, low-probability events (often not in historical data)

the BALANCING AMOUNT required to bring the best estimate before ENID up to an amount allowing for all possible future outcomes

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2
Q

describe how ENID can be identified (3)

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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3
Q

why might it be beneficial for insurers to attempt to identify ENIDs (3)

A
  • may increase awareness of potential risks by senior management
  • may assist in calculation of loading using frequency/severity methods
  • may increase regulator confidence in company’s risk management (due to insights gleaned)
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