Persistency IPSB Risk Capital Margin

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For firms that adopt the twin peaks approach, the FSA has planned to loosen previous detailed drafting of the assumptions to be made about persistency (that is the numbers of policyholders that are expected to continue to maintain their policies).

Whereas previously firms could make no allowance for policyholders voluntarily discontinuing their policies,a prudent allowance is now permitted.The FSAwill still require that the assumptions firms make are prudent on an overall basis (PRU 7.3.76R).

Firms that calculate the MCR (firms who do not use the twin peaks approach) only will remain subject to the current rules and guidance.

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Risk Capital Margin
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