Gross vs Net RA

cornedovcornedov
in CIA.IFRS17-2

If we were going to use the quantile method to determine the RA for LRC or LIC would we use the loss distribution of net loss or gross losses to determine our RA?

RA is "compensation an entity requires" so assuming they know they will have reinsurance in place I would think they would only require compensation for the net risk. However, I didn't see anything about this mentioned and I was wondering if there was any rule on how this should be done?

Comments

  • Staff-T1Staff-T1

    There is not really a concept of a "net" RA. Your risk adjustment for the ceded losses is considered in the ARC

  • mandatory_coveragesmandatory_coverages

    when we talk about ceded RA and gross RA is the ceded RA the RA for the risks that we cede and the gross is RA for all of our risks including the ones we keep and cede?

  • Staff-T1Staff-T1

    yes pretty much - The ceded RA is for your AIC/ARC

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