Comparison of NAIC Life, P&C and Health RBC formulas Detailed Grid - Insurance Risk Health
P&C
Life
General
A. 1
Pricing/Underwriting Risk Risk: Future Pricing risk (I.e. business that will be priced in the future) Risk: Past pricing, future event risk
2
Reserving Risk Risk: Past events - estimation (and process?) risk
Page 1 Insurance Risk February 2002
factor x Written Premium
Not reflected
Not reflected directly. Considered as a part of C-4. To the extent captured by the Unearned ("Tiered" factor) times (EP) times (Loss Health: factor x EP. (Details same as Health Premium reserve (UPR), there is no RBC Ratio) times (1 - Managed Care credit) for for Health lines, but tiered factor x EP without reflection. The reason is that acquisition costs major Health lines. ["Tiered" factor refers to further adjusting for DI, LTC, and some are incurred up front under P&C statutory a factor that varies with successive layers of supplemental coverage.) accounting, but the UPR reserve does not reflect EP volume, e.g. one factor for first $X million Life: factor times amount at risk. Annuity: this. Therefore the conservative accounting for of EP, and a different factor for next $Y na prepaid expenses and the UPR already covers million, etc..] The factors used are "tiered", such that one this risk, and any added RBC load would have factor applies to the first $X million, a different factor applies to the next $Y million, etc.. been redundant. For contracts with delayed booking of written premium, the charge applied to WP does provide a nominal charge for this risk.
factor x Loss Reserve
Not reflected.
factor x (Health) claim reserve