RBC R4 & R5 - loss sensitive discount
Why subtract loss sensitive discount for reserve and NWP risk? Unlike we add penalty items for bond size and asset concentration in R1, R2.
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Why subtract loss sensitive discount for reserve and NWP risk? Unlike we add penalty items for bond size and asset concentration in R1, R2.
Comments
Loss-sensitive policies involve collecting additional premium, depending on the size of the loss experienced. This lowers the risk they assume. Therefore, there is a suitable reduction to R4 and R5 related to carrying this kind of policies.
Thanks!
Sure, good luck.