Article 90c
Simplified calculation of the capital requirement for fire risk
1.
Where Article 88 is complied with, insurance and reinsurance undertakings may calculate the capital requirement for fire risk referred to in Article 132(1) as follows:
SCRfire
= max(SCRfirei
; SCRfirec
; SCRfirer
)
where:
a)
SCRfirei denotes the largest industrial fire risk concentration;
b)
SCRfirec denotes the largest commercial fire risk concentration;
c)
SCRfirer denotes the largest residential fire risk concentration.
2.
The largest industrial fire risk concentration of an insurance or reinsurance undertaking shall be equal to the following:
SCRfirei
= max(E
1,i
; E
2,i
; E
3,i
; E
4,i
; E
5,i
)
where Ek,i denotes the total exposure within the perimeter of the k-th largest industrial fire risk exposure.
3.
The largest commercial fire risk concentration of an insurance or reinsurance undertaking shall be equal to the following:
SCRfirec
= max(E
1,c
; E
2,c
; E
3,c
; E
4,c
; E
5,c
)
where Ek,c denotes the total exposure within the perimeter of the k-th largest commercial fire risk exposure.
4.
The largest residential fire risk concentration of an insurance or reinsurance undertaking shall be equal to the following:
SCRfirer
= max(E
1,r
; E
2,r
; E
3,r
; E
4,r
; E
5,r
; θ)
where:
(a)
Ek,r denotes the total exposure within the perimeter of the k-th largest residential fire risk exposure;
(b)
θ denotes the market share based residential fire risk exposure.
5.
For the purpose of paragraphs 2, 3 and 4, the total exposure within the perimeter of the k-th largest industrial, commercial or residential fire risk exposure of an insurance or reinsurance undertaking is the sum insured by the insurance or reinsurance undertaking with respect to a set of buildings that meets all of the following conditions:
(a)
in relation to each building, the insurance or reinsurance undertaking has obligations in lines of business 7 and 19 set out in Annex I which cover damage due to fire or explosion, including as a result of terrorist attacks;
(b)
each building is partly or fully located within a radius of 200 meters around the industrial, commercial or residential building with the k-th largest sum insured after deduction of the amounts recoverable from reinsurance contracts and special purpose vehicles.
For the purposes of determining the sum insured with respect to a building, insurance and reinsurance undertakings shall take into account all reinsurance contracts and special purpose vehicles that would pay out in case of insurance claims related to that building. Reinsurance contracts and special purpose vehicles that are subject to conditions not related to that building shall not be taken into account.
6.
The market share based residential fire risk exposure shall be equal to the following:
θ = SIav
· 500 · max(0,05; maxc(marketSharec
))
where:
(a)
SIav is the average sum insured by the insurance or reinsurance undertaking with respect to residential property;
(b)
c denotes all countries where the insurance or reinsurance undertaking has obligations in lines of business 7 and 19 set out in Annex I covering residential property;
(c)
marketSharec is the market share of the insurance or reinsurance undertaking in country c related to obligations in those lines of business covering residential property.