Solvency margin

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The solvency margin was an insurance term . With the introduction of Solvency II in the European Union in 2016, the solvency tests described below were replaced by methods that measure the actual underlying risks.

Before Solvency II, the solvency margin was a target or minimum amount of capital that an insurer had to have in relation to the currency of policyholder interests . It was a component of solvency .

In simple terms, equity is a capital buffer that is intended to protect against extreme damage that goes beyond premium income. The level of the solvency margin in Germany was determined by the regulation on capital resources for insurance companies (KapAusstV). In Switzerland , Article 9 of the Insurance Supervision Act (VAG) is authoritative, which stipulates the obligation to adhere to a solvency margin and transfers the regulation of the details to the Federal Council and FINMA .

Damage insurance

This article or paragraph presents the situation in Germany . Help us to describe the situation in other countries.

Before the introduction of the Solvency Capital Requirement (SCR) with Solvency II, the solvency margin for non-life insurance was derived from the maximum of two indices , with the higher of the two indices being used for the assessment:

1. Contribution index
2. Damage index

The result was then called target solvency. To carry out the solvency test, the actual solvency was compared with the target solvency. If the target solvency was lower than the actual solvency, the test was considered passed.

The calculation:

1. Premium index (18% x gross premiums (for premium volumes up to € 61.3 million) + 16% of gross premiums (for premium volumes over € 61.3 million)) x retention rate (at least 50%)
2. Claims index (26% x gross claims (for claims expenses up to € 42.9 million) + 23% of gross claims (for claims volume over € 42.9 million)) x retention rate (at least 50%)

Life insurance

This article or paragraph presents the situation in Germany . Help us to describe the situation in other countries.

For life insurance, the solvency margin before Solvency II was calculated as 4% of the actuarial reserves and gross unearned premiums excluding cost shares + 0.3% of the risk capital.

Web links

• Capital Equipment Ordinance (KapAusstV) (repealed with effect from January 1, 2016)
• Synopsis of the KapAusstV

Individual evidence

1. ↑ Art. 9 ISA. In: Systematic collection of the federal government. Retrieved March 19, 2012 . 
2. ↑ ^{a b} Control and leadership in the company, VVW Karlsruhe
3. ↑ Ordinance on the capital resources of insurance companies (KapAusstV) ( Memento of the original from September 24, 2015 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. 
4. ↑ Art. 1 of December 16, 2015 ( Federal Law Gazette I p. 2345, 2346 )