REINSURANCE: The amount of capital needed to absorb the various risks of operating an insurance business. For example, a higher risk business requires more capital than one with lower risks. The calculation is intended to be unique to each insurer.
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The assessment of the capital requirement for a general insurer by considering the risk profile of the business written and its operations. The required minimum margins of solvency are determined after considering IRDA requirements in India.
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The determination of a member’s capital requirement according to the spread of syndicates in which he participates and the nature of business that those syndicates underwrite.