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

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

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

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

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

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

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Q. What does ASM stand for in insurance calculations?

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

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

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

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

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

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

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

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

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

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

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

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

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Q. How is the solvency ratio calculated?

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