My take is something like this.
You need capital to deal with the possibility of adverse developments. This uncertainty arises because of uncertainties in exposure and uncertainty in your estimate of the liability for incurred claims (reserve risk).
If you look at the full non- life BSCR uncertainty in exposure is broken down further into catastrophe, premium reserve and lapses. The MCR measures exposure risk by using a factor of the premium. The reserve risk under your BSCR is similar to the factor applied to your technical provisions under your MCR.
In principle, the MCR is using a simpler method than the SCR to measure the minimum capital required to cover somewhat similar risks but at a more global level with a factor method.
Last edited: Jul 26, 2022