Draft of a System for Solvency Control in Non-Life Insurance

An outline is given of a proposed system for solvency control in non-life insurance that has recently been discussed within a Working Party appointed by the Norwegian supervisory authorities. According to this system the factual technical reserves must at any time be sufficient to meet, with high probability, all future liabilities stipulated by insurance contracts that have either expired or are currently in force. The system is applied to a provisional, simple model that has been fitted to claims data assembled from Norwegian non-life companies. The numerical examples illustrate, inter alia, how the required reserve depends on the volume of the business, the portfolio mix, and the reinsurance cover.