Standard formula insurers face higher operational risk capital charge

Change to definition of unit-linked expenses would increase firms' SCR


Life insurers using the Solvency II standard formula could see their operational risk capital requirement rocket following an update to the draft delegated acts.

Industry sources say a non-public version of the delegated acts, dated July 28, alters the definition of the expense base for unit-linked policies to implicitly include acquisition costs. A strict reading of the new text suggests firms will now have to include all expenses incurred in issuing a new unit-linked contract, including commis

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