1. 

   curiousactuary Member

   Why does the risk margin increase with increased reinsurer default risk. I understand the SCR will increase if the capital requirements from the default risk module increase. Is the reason why the risk margin increases is because reinsurer default risk is classed as a non-hedgeable risk?

    

   curiousactuary, May 28, 2020

   #1
2. 

   mugono Ton up Member

   yes

    

   mugono, May 28, 2020

   #2
3. 

   Em Francis ActEd Tutor Staff Member

   Yes, counterparty default risks are classified as non-hedgeable, along with residual market risks, underwriting risks and operational risks, as there is not deemed to be a sufficient deep and liquid market to hedge them.

    

   Em Francis, May 29, 2020

   #3

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