Question

What is "Risk Based Capital"?

a.

The capital needed to absorb the risks of operating an insurance business

b.

The amount of capital invested by reinsurers in high-risk businesses

c.

The calculation of capital required for retrocession agreements

d.

The capital allocated for run-off cancellation or termination

Posted under IC85 Reinsurance Management

Answer: (a).The capital needed to absorb the risks of operating an insurance business Explanation:"Risk Based Capital" can be defined as the amount of capital needed to absorb the various risks of operating an insurance business. It takes into account the level of risk associated with different types of businesses.

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