Technical Provisions Risk Margin

Application provision

1.1 Unless otherwise stated, this Part applies to:

  1. (1) a UK Solvency II firm;
  2. (2) in accordance with Insurance General Application 3, the Society, as modified by 16; and
  3. (3) in accordance with Insurance General Application 3, managing agents, as modified by 16.

4.1

01/01/2016

Where firms value the best estimate and risk margin separately, the risk margin must be an amount equal to the cost that a Solvency II undertaking would incur in order to hold eligible own funds to cover the SCR necessary to support the insurance and reinsurance obligations over their lifetime, determined using the cost-of-capital rate.


[Note: Art. 77(5) of the Solvency II Directive]

4.2

01/01/2016

The risk margin must be such as to ensure that the value of the technical provisions is equivalent to the amount that a Solvency II undertaking would be expected to require in order to take over and meet the insurance and reinsurance obligations over their lifetime.


[Note: Art. 77(3) of the Solvency II Directive]