Diversification Credit within Insurance Risk
what's the difference between "Diversification Credit within Insurance Risk" (in chapter 4) & "Diversification Credit" in capital required formula?
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what's the difference between "Diversification Credit within Insurance Risk" (in chapter 4) & "Diversification Credit" in capital required formula?
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The former refers to diversification that you would obtain from writing different types of insurance (For example, property, auto, commercial, etc) while the latter refers to the diversification between insurance, market, credit and operational risk
Would the former also include diversification from Geographic location?
I am trying to see if this diversification is already captured in the diversification credit within insurance risk.
It doesn't say but I would assume so. The risk factor is meant to represent the average canadian insurer and the average canadian insurer writes across multiple provinces