Risk Adjustment for Reinsurance

ChristoRoyerChristoRoyer
edited February 2023 in CIA.IFRS17-IC

I remember from the IFRS-2 reading that the RA is for all non-financial risk like Lapse and persistency risk. But it seems like for reinsurance, it also include all risks transfered (the compensation required to accept the risk instead of ceding it). Unless I misunderstood the definition of financial risk, but it looks like the RA for insurance is not at all the same thing as for the underlying contract. Is that the case?

Comments

  • Staff-T1Staff-T1

    Yeah the risk adjustment for reinsurance held is not the same as for insurance contracts held. The source describes it succinctly as follows:

    • The RA for the insurance contracts issued represents the compensation that the entity
      requires for bearing the non-financial risk associated with writing those contracts

    • The RA for the reinsurance contracts held accounts for the non-financial risk transferred from the cedant to the reinsurer(s).

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