Risk Adjustment (RA) corresponds to the compensation that the insurance entity requires for bearing the uncertainty about future cash flows related tonon-financial risks.
The RA has a very strong impact on the valuation of future profits and the IFRS result of the contracts in the portfolio.
The RA as defined in the IFRS 17 framework is a quantity conceptually close to the Risk Margin in the Solvency II environment, although differences remain in the calculation of these elements.
2 major issues arise for (re)insurance companies who are currently structuring their RA estimation methodologies.
Ultimately, the RA offers a great opportunity for insurance companies to fully exploit their ERM (Enterprise Risk Management) corpus, as the Solvency II framework has enabled them to make considerable progress in this area.
Our paper covers:
This publication was produced under the direction of:
Chief Innovation Officer
Deputy CEO ADDACTIS France
With addactis® experts in France:
Marielle DE LA SALLE
Business & Innovation Advisor
Head of Modeling & Risk P&C
Head of Modeling & Finance