risk of non-performance
What exactly is risk of non-performance?
Can you give an example?
Since non-performance risk is a non financial risk, shouldn't that be part of the RA (for non financial), how come its part of the cashflow? Shouldn't this affect the CSM?
I don't fully understand non-performance risk so my question may not make sense.
Comments
Non-performance risk is a financial risk since it deals with credit risk and is basically the risk that the reinsurer will default and not fulfill obligations to the primary insurer. It is clearly stated in the source that it is not part of the RA.