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European Insurance and Occupational Pensions Authority

2275

Q&A

Question ID: 2275

Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)

Topic: Solvency Capital Requirement (SCR)

Article: 116

Status: Rejected

Date of submission: 02 Apr 2021

Question

For the purposes of calculating the non-life and NSLT premium and reserve risk, should the volume measure for premium risk be a non-negative value? This is strictly specified for the volume measure for reserve risk in article 116, paragraph 6 of the Commission Delegated Regulation (EU) 2015/35, but not for the volume measure for premium risk. In addition, if the volume measure for premium risk is allowed to be negative, it is possible to have the factor for geographical diversification calculated by the formula in Annex III of the same regulation to be greater than 1. Should such factors be corrected to 1?

EIOPA answer

This question has been rejected because the matter it refers to has been answered in Q&A 2132

As the volume measure for premium risk is net of reinsurance, it corresponds to the part of the gross risk that has not been covered by the reinsurance contract. Reinsurance contract cannot cover larger risk than the gross risk which indicates that the volume measure for premium risk should always be non-negative.

When it comes to the value of the factor for geographical diversification of a given segment, according to article 116, paragraph 7 of the Commission Delegated Regulation (EU) 2015/35, it shall be either 1 or a value calculated in accordance with Annex III of the Regulation. The structure of the formula in article 116 paragraph 2, as well as formula in Annex III paragraph 1 indicate that the maximal value of the factor for geographical diversification should equal to 1.