Question ID: 3221
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Topic: Solvency Capital Requirement (SCR)
Article: 127(2)(b)
Status: Rejected
Date of submission: 07 Jan 2025
Question
Is the premium volume P_property as defined in article 127 Paragraph 2. b only related to non-proportional reinsurance contracts exposed to natural catastrophe risks (related to reinsurance obligations of line of business 28 as set out in Annex I other than non-proportional reinsurance obligations relating to insurance obligations included in lines of business 9 and 21 as set out in Annex I) or to all reinsurance contracts (related to reinsurance obligations of line of business 28 as set out in Annex I other than non-proportional reinsurance obligations relating to insurance obligations included in lines of business 9 and 21 as set out in Annex I)? So if there is e.g. a non-proportional reinsurance contract only covering fire losses, has the premium volume earned by this contract to be considered in P_property? And going one step further, for a contract covering natural catastrophe and fire losses, has only the premium volume related to the natural catastrophe losses to be considered in P-property or the full premium volume?
Background of the question
If a reinsurance company signing in general non-proportional reinsurance contracts which are only exposed to a small portion to natural catastrophes like contracts covering engineering risk it might have the same non-porportional cat risk like a reinsurance company signing in general non-proportional reinsurance contracts which are exposed to a large portion to natural catastrophes, if the premium volume P_property relates to all premiums earned. As the calibratiion paper of the standard formula gives no information regarding this topic, I put the question now in the Q&A.
EIOPA answer
This question has been rejected because the issue it deals with is already explained or addressed in Article 127 (2b) of the Delegated Regulation 2015/35. Pursuant the provision of Article 127 (2)(b) P_property consists in an estimate of the premiums to be earned by the (re-)insurance undertaking during the following 12 months for each contract that covers the reinsurance obligations of LoB 28 (Non-proportional reinsurance obligations relating to insurance obligations included in lines of business 5, 7 and 9 to 12) other than non-proportional reinsurance obligations relating to insurance obligations included in LoBs 9 (Credit and suretyship) and 21 (proportional reinsurance for Credit and Suretyship). That includes also obligations that do not relate to natural catastrophe risk.