Reinsurance contracts can be a key measure for insurance undertakings to manage their risks. Well-structured reinsurance contracts may reduce risks and consequently solvency capital requirements. DNB has issued the final version of attached Q&A with some of the aspects DNB considers relevant for the recognition of reinsurance contracts in the calculation of the solvency capital requirements. The attached Q&A was open for consultation up to 28 March 2019; you can no longer respond to this consultation.
Summary and resolution of consultation responses:
Stakeholders raised concerns about the requirement to gather information about the retrocession by the reinsurance undertaking. It has been clarified that this is a requirement if the reinsured risks are a significant portion of the risks of the reinsurance undertakings. Stakeholders pointed out that other triggers, like a rating downgrade, exist that may force the reinsurance contract to end. The Q&A has been adjusted to reflect this. Stakeholders also commented on the reappearance of the risk margin if the reinsurance undertaking were to default; this would not be the case if the insurance undertaking enters into a new reinsurance contract. This has also been added to the Q&A.