Standard formula insurers face higher operational risk capital charge

Change to definition of unit-linked expenses would increase firms' SCR

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Life insurers using the Solvency II standard formula could see their operational risk capital requirement rocket following an update to the draft delegated acts.

Industry sources say a non-public version of the delegated acts, dated July 28, alters the definition of the expense base for unit-linked policies to implicitly include acquisition costs. A strict reading of the new text suggests firms will now have to include all expenses incurred in issuing a new unit-linked contract, including commis

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