U.K. regulator struggles with warning indicator for insurers' capital

01/28/2014 | Risk.net (subscription required)

The U.K.'s Prudential Regulation Authority admits to frustration in trying to devise suitable early warning indicators assessing insurers' capital requirements. "There is a natural tension between the objective of simplicity and achieving a system that delivers genuine insight into the behavior of a complex variable such as the [Solvency Capital Requirement]. Striking the right balance is never going to be easy," said Russell Ward, senior consultant at Milliman in London. However, work will continue, and the PRA hopes to reach a solution early this year.

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