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Old 04-25-2020, 01:15 AM
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Atomizer Atomizer is offline
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Default Principle of Correspondence for reinsurance arrangements in Solvency II

I was reading this IFoA working party paper today -

In section 4.3 the authors explain the principle of correspondence for legally obliged contracts along with 2 examples for 4.3.1 and 4.3.2 where they discuss how the reinsurance contracts are dealt on a LOD and RAD basis.

I understood the part that the legally obliged "existing" reinsurance contracts must correspond to the primary policies that exist. However, I do see they are suggesting a proportion relating to the cover on the reinsurance contracts that strictly doesn't yet fall within the contract boundary.

This part is not very clear to me. How do they determine which proportion of unincepted contracts cover that has not yet strictly exist within the contract boundary to be included for the calculation of solvency II Technical Provisions?

Can anyone practicing the profession and has expertise in Solvency II comment on it and can you guide me with some direction/understanding please?

I am confused with this principle.

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