Regulatory AlertsGPS 115 Capital Adequacy: Insurance Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard GPS 115 to require general insurers and Level 2 insurance groups to maintain adequate capital against insurance risks. The standard mandates the use of the Standard Method to calculate the Insurance Risk Charge, which comprises components for Outstanding Claims Risk and Premiums Liability Risk. It establishes specific capital factors for various business categories and defines rules for allocating multi-class contracts and handling material net written premiums.
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