Non-Life Professional Malpractice Risk

Overview

This calculator prepares the Article 133 liability amount for Professional Malpractice Risk.^[1] It covers catastrophe exposure from professional-service liability, where claims arise from alleged errors, omissions, negligence, or breach of duty in a professional activity.

Input Terms

• Professional Malpractice Premium: Premiums earned during the next 12 months for insurance and reinsurance obligations in the professional malpractice risk group, before deducting reinsurance premiums.^[1]
• Professional Malpractice Largest Limit: The largest limit of indemnity provided in this risk group; it supports the Article 133 claim-count diagnostic and does not cap the group risk amount.^[1]
• Professional Malpractice Unlimited Cover: A yes/no indicator that the undertaking provides unlimited cover in this risk group; when cover is unlimited, Article 133 sets the diagnostic claim count to one.^[1]
• Professional Malpractice Risk Factor: The fixed Annex XI factor for this group; a factor of 1.0 means the prepared group amount equals the relevant premium.^[1]
• Professional Malpractice Risk: The prepared group amount obtained by multiplying the risk factor by the premium base.^[1]

Technical Rationale

Article 133 models professional malpractice as a liability catastrophe group because many individual claims can be driven by the same professional error pattern, legal environment, or market-wide duty-of-care issue. The simple factor formula translates the next-12-month premium base into the standardized instantaneous loss amount for this risk group.

The largest limit and unlimited-cover inputs support the Article 133 claim-count assumption. They explain how many representative claims would make up the instantaneous loss, but they do not reduce the factor-based amount.

Important Notes

• Scope: The amount is one Article 133 liability group component in the diversified liability risk aggregation.
• Recoverables: Article 133 does not deduct reinsurance or SPV recoverables from the instantaneous loss amount. Recovery effects require a stressed basic-own-funds model rather than a simple deduction on this page.
• Reporting: The result supports the Article 133 liability catastrophe component used in the S.25.01.01 standard-formula reporting view.^[2]