‘Theoretical risk margins differ from practical risk margins by different interpretations and imprecision’
Are the differences in risk margins meaningful?
By Andrew Henning and David Kirk
|ANDREW HENNING is an actuary
focussing on non-life insurance
and financial modelling with
|DAVID KIRK is a principal and consulting
actuary with Milliman in Africa, specialising in
financial reporting, market entry, and mergers
The risk margins included in technical provisions for solvency reporting are not the same across different regulatory regimes.
This is true even where the underlying principles guiding the regulatory approach seems quite similar. Some of these differences are subtle, but others reflect a fundamentally different view on the purpose of the risk margin.
This article represents the opinion of the authors, and not necessarily the opinion of the AAE.
This article was published in The European Actuary No. 27 – September 2021