The assessment of solvency and determination of limits for risk acceptance in insurance companies
The subject of this paper is the presentation of key requirements for Solvency II project, the methodology for testing of capital adequacy and methods for identification, definition and establishment of risk limits, as a limit for acceptance, bearing and control of exposure to certain risks in insur...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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University Dzon Nezbit
2017-01-01
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| Series: | Megatrend Revija |
| Subjects: | |
| Online Access: | http://scindeks-clanci.ceon.rs/data/pdf/1820-3159/2017/1820-31591702073D.pdf |
| _version_ | 1818313190572818432 |
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| author | Drljača Dejan Sokić Miro |
| author_facet | Drljača Dejan Sokić Miro |
| author_sort | Drljača Dejan |
| collection | DOAJ |
| description | The subject of this paper is the presentation of key requirements for Solvency II project, the methodology for testing of capital adequacy and methods for identification, definition and establishment of risk limits, as a limit for acceptance, bearing and control of exposure to certain risks in insurance companies. The aim of the paper is to show that the capital adequacy is the key factor for insurers' safety, i.e. guarantee of capability of an insurer to settle any future liabilities and leverage for strengthening of insurer's market position. Business operations of insurance companies are exposed to a significant number of risks that differ by their nature, character and influence, due to which adequacy of calculated technical reserves does not provide a satisfactory level of safety in case of more significant impairments of assets and funds of insurers, as well as in case of significant deviations between amounts of settled claims and actuarially expected amounts of liabilities based on claims. Stress testing of capital adequacy will show that losses due to impairment of risky securities, difficult collection of low liquid, i.e. securities that are difficult to market, inability to collect receivables from reinsurers, as well as losses due to inadequately calculated reserved claims, must be covered by a solvent capital. The paper is structured so as to provide a review of rules, elements and principles that are the foundation of solvency requirements in insurance companies, methodologies of calculation of guarantee reserve, technical basis for stress testing which assesses capital adequacy of insurers, as well as methods for establishment of limits of exposure to certain risks. |
| first_indexed | 2024-12-13T08:29:49Z |
| format | Article |
| id | doaj.art-2a9199c5845442c99512e6088c9acb67 |
| institution | Directory Open Access Journal |
| issn | 1820-3159 |
| language | English |
| last_indexed | 2024-12-13T08:29:49Z |
| publishDate | 2017-01-01 |
| publisher | University Dzon Nezbit |
| record_format | Article |
| series | Megatrend Revija |
| spelling | doaj.art-2a9199c5845442c99512e6088c9acb672022-12-21T23:53:47ZengUniversity Dzon NezbitMegatrend Revija1820-31592017-01-01142739010.5937/MegRev1702073D1820-31591702073DThe assessment of solvency and determination of limits for risk acceptance in insurance companiesDrljača Dejan0Sokić Miro1Kompanija 'Dunav osiguranje' a.d.o., BeogradKompanija 'Dunav osiguranje' a.d.o., BeogradThe subject of this paper is the presentation of key requirements for Solvency II project, the methodology for testing of capital adequacy and methods for identification, definition and establishment of risk limits, as a limit for acceptance, bearing and control of exposure to certain risks in insurance companies. The aim of the paper is to show that the capital adequacy is the key factor for insurers' safety, i.e. guarantee of capability of an insurer to settle any future liabilities and leverage for strengthening of insurer's market position. Business operations of insurance companies are exposed to a significant number of risks that differ by their nature, character and influence, due to which adequacy of calculated technical reserves does not provide a satisfactory level of safety in case of more significant impairments of assets and funds of insurers, as well as in case of significant deviations between amounts of settled claims and actuarially expected amounts of liabilities based on claims. Stress testing of capital adequacy will show that losses due to impairment of risky securities, difficult collection of low liquid, i.e. securities that are difficult to market, inability to collect receivables from reinsurers, as well as losses due to inadequately calculated reserved claims, must be covered by a solvent capital. The paper is structured so as to provide a review of rules, elements and principles that are the foundation of solvency requirements in insurance companies, methodologies of calculation of guarantee reserve, technical basis for stress testing which assesses capital adequacy of insurers, as well as methods for establishment of limits of exposure to certain risks.http://scindeks-clanci.ceon.rs/data/pdf/1820-3159/2017/1820-31591702073D.pdfsolvencyriskstress testcapital adequacyrisk limit |
| spellingShingle | Drljača Dejan Sokić Miro The assessment of solvency and determination of limits for risk acceptance in insurance companies Megatrend Revija solvency risk stress test capital adequacy risk limit |
| title | The assessment of solvency and determination of limits for risk acceptance in insurance companies |
| title_full | The assessment of solvency and determination of limits for risk acceptance in insurance companies |
| title_fullStr | The assessment of solvency and determination of limits for risk acceptance in insurance companies |
| title_full_unstemmed | The assessment of solvency and determination of limits for risk acceptance in insurance companies |
| title_short | The assessment of solvency and determination of limits for risk acceptance in insurance companies |
| title_sort | assessment of solvency and determination of limits for risk acceptance in insurance companies |
| topic | solvency risk stress test capital adequacy risk limit |
| url | http://scindeks-clanci.ceon.rs/data/pdf/1820-3159/2017/1820-31591702073D.pdf |
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