Question ID: 2291
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: ARTICLE 116 Annex II
Status: Final
Date of submission: 17 May 2021
Question
Following our review of Annex II and Article 116 we have following two questions on the calculation of the Geographical Diversification factor: 1) When estimating the Geographical Diversification Factor for the Gross Premium & Reserve risk charge, please confirm if this factor should be estimated based on the Gross premium and reserve inputs or if the Gross Diversification Factor should = Net Diversification Factor? 2) Should the premium volume used for estimating the Geographical Diversification be the maximum premium based on the LOB and the region or should the premium volume be the maximum premium based on the LOB?
EIOPA answer
1) For the estimation of the Geographical Diversification factor, the net diversification factor should be used.
2) The premium volume used for estimating the geographical diversification should be the maximum premium based on the LoB and the region.