Regulatory AlertsGPG 116 Insurance Concentration Risk
The Australian Prudential Regulation Authority issued this guide to assist general insurers and Level 2 insurance groups in complying with GPS 116 regarding the management of insurance concentration risk. It outlines prudent practices for boards to assess exposure to natural and non-natural perils using catastrophe models and stress testing to determine appropriate reinsurance arrangements. The document details the calculation of the Insurance Concentration Risk Charge, including its four components and the requirement for a whole-of-portfolio approach to ensure adequate capital adequacy.
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