Abstract
The risk-based capital requirements adopted by the NAIC in 1994 are a major advance in the solvency regulation of property/casualty insurance companies. The components of the risk-based capital formula are grounded in actuarial and financial analyses of the risks faced by insurance companies and of the capital needed to guard against those risks. The intricacy of the risk-based capital formula, the manifold considerations that shaped it, and the lack of explanation provided by the NAIC make the new capital requirements difficult to follow. This paper leads the reader through the formula, illuminating its workings and its rationale.
Page
297-389
Year
1996
Syllabus year
2010
Syllabus exam
7-US
Categories
Actuarial Applications and Methodologies
Capital Management
Capital Requirements
Actuarial Applications and Methodologies
Regulation and Law
Risk-Based Capital
Publications
Proceedings of the Casualty Actuarial Society
