The risk-based capital requirements for life insurers are based on a formula that considers four types of risk.One risk reflects whether the insurer will have enough surplus if claims are higher than expected.This risk is called

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The risk that reflects whether the insurer will have enough surplus if claims are higher than expected is called insurance risk. Asset risk refers to the risk of losses due to changes in the value of investments. Interest rate risk refers to the risk of losses due to changes in interest rates. Business risk refers to the risk of losses due to factors such as competition or changes in industry trends.

The Risk-Based Capital Requirements for Life Insurers Are Based on a Formula