Q. What is the minimum required capital if the formula for RSM yields a lower value?

View solution

Q. Which approach is becoming popular to overcome the limitations of the factor-based approach in risk measurement?

View solution

Q. What is the main limitation of the factors-based approach in calculating Required Solvency Margin (RSM)?

View solution

Q. What is the main advantage of the Risk Based Capital (RBC) approach over the factors-based approach?

View solution

Q. How does the Risk Based Capital (RBC) approach benefit companies with good risk management systems?

View solution

Q. What is the purpose of using Risk Based Capital (RBC) as a tool according to insurance regulators?

View solution

Q. What is the potential consequence of an insurer being solvent but physically insolvent?

View solution

Q. What does ASM stand for in insurance calculations?

View solution

Q. Which of the following assets is assumed to have zero value for ASM calculations?

View solution

Q. How is the value of computer equipment computed for ASM calculations?

View solution

Q. What is the purpose of calculating the solvency ratio in insurance?

View solution

Q. What is the regulatory requirement for maintaining the solvency ratio by insurers?

View solution

Q. What does the profit margin (return on capital) represent?

View solution

Q. Which of the following is considered as an outflow in the calculation of profit margin?

View solution

Q. What is the advantage of using a cash flow method to determine profit margins and premium rates?

View solution

Q. What is the term used to refer to the estimate of profit made when the last policyholder exits the portfolio?

View solution

Q. How are profit margins typically used in the insurance industry?

View solution

Q. What is the Required Solvency Margin (RSM)?

View solution

Q. What risks does the computation of RSM address in the insurance business?

View solution

Q. What does the Actual Solvency Margin (ASM) represent?

View solution