The RBC standard for life and property/casualty (P/C) companies is based on the Risk-Based Capital (RBC) For Insurers Model Act (#312), which the NAIC adopted in 2012.
Rather, RBC is one of the tools that gives regulators legal authority to take control of an insurance company.īackground: Regulators use RBC requirements to determine the minimum amount of capital required for an insurer to support its operations and write coverage. RBC requirements are not designed to be used as a stand-alone tool in determining financial solvency. In essence, the RBC formula calculations are critical thresholds that enable timely regulatory intervention. The purpose of RBC requirements is to identify weakly capitalized companies, which facilitates regulatory actions to ensure policyholders will receive the benefits promised without relying on a guaranty association or taxpayer funds. RBC is intended to be a regulatory standard and not necessarily the full amount of capital that an insurer would need to hold to meet its objectives.
That is, the company must hold capital in proportion to its risk. The RBC requirement is a statutory minimum level of capital that is based on two factors: 1) an insurance company’s size and 2) the inherent riskiness of its financial assets and operations. One way they do this is by imposing a risk-based capital (RBC) requirement. Issue: Regulators are charged with ensuring that insurance companies can fulfill their financial obligations to policyholders.
0 kommentar(er)
