Where the reinsurance contract meets the requirements set out in Article 209 to 215 of the Commission Delegated Regulation (EU) 2015/35, the effect of the lapse shocks on the recoverables from reinsurance contracts should be included in the calculation of the capital requirement for lapse risk (i.e. shock net of reinsurance).

Where the above condition is not met, the effects should only be included if the result is a higher capital requirement (i.e. potentially shock gross of reinsurance).