An inappropriate calculation of the MCR could threaten the Solvency II regime, CEA warns. Approaches to calculating the MCR that are not consistent with the overall system could jeopardise the effectiveness of the whole Solvency II regime.
The CEA warns that an inappropriate calculation of the MCR could threaten the Solvency II regime.
Approaches to calculating the MCR that are not consistent with the overall system could jeopardise the effectiveness of the whole Solvency II regime, CEA director Michaela Koller said. The MCR should be appropriately linked to the solvency capital requirement so that both reflect the true risk profile of the insurer.
The CEA suggested a compromise solution in which the solo MCR is calculated as a percentage of the SCR. This percentage is then re-expressed as a percentage of the insurer’s technical provisions (or premiums as appropriate) to address the issues of legal certainty and auditability as well as to avoid any interim calculation of the SCR.
The CEA believes that other MCR calculation proposals are too simple or too complex. . “We must avoid Solvency I-type principles in the new Solvency II framework”, Koller said.
Press release
© CEA - Comité Européen des Assurances
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