I'm trying to learn a bit more about this. There isn't anything on the core reading about this but it was referenced in a recent exam paper. What is the difference between these two. The core reading describes a number of different methods for calculating the SCR via a standard formula, such as... Standard formula Standard formula with simplification Standard formula with undertaking specific parameters In a recent exam, there was reference to two approaches to calculating the SCR - Method 1 (factor-based) and Method 2 (scenario based). Is the example in the core reading the factor-based method and is this the most common form of the standard model? Any clarification on this would be great? I think the core reading is a bit light on this area. Many thanks
i suspect the undertaking specific parameters may refer replacing the calibrated factors in standard formula, i.e. rather than take 46.5% of market value of type I equity as market risk charge, insurer may able to replace this with another number? simplification may refer to "Technical Specification for the Preparatory Phase (Part I)" V.2.6.2. Possible simplifications for non-life insurance p107. For example, simplification of reserve calculation. I would also want some clarification on Method 1 & Method 2, are these specific methods to calculation catastrophe risk charge (as per 2013 Apr Q1)? The current core reading do not mentioned much about this, will this be something include in previous core reading?
