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Reserve Adequacy Diagnostics

Calculate the Reserve Deficiency Amount instantly.

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Reserve Deficiency

€4 402 397

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Triangle-Indicated IBNR - Booked Best Estimate

€4 402 397

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Zero Floor

€0

Recognized Management Actions

€1 000 000

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Management Actions Capacity

€1 000 000

×

Management Action Gate

Pass

Deficiency After Actions

€3 402 397

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Reserve Deficiency - Recognized Management Actions

€3 402 397

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Zero Floor

€0

Residual Deficiency

€3 402 397

Coverage After Actions

74.61%

DiagnosticValueStatusBasis
Reserve Band32.85%redDeficiency ratio compared with the green/amber/red thresholds.
Material BreachYesredMateriality threshold applied to the reserve deficiency ratio.
Management Action GateYesgreenPolicy approval, operational feasibility, and evidence freshness must all pass.
Evidence FreshnessYesgreenEvidence age must be within the configured maximum evidence age.
Trace Reconciliation€0greenAbsolute gap between recognized capacity and trace recognized capacity.
Combined Governance BreachNogreenRaised when trace reconciliation breaches or the action gate fails.
1Step 1

Compare booked best estimate against triangle-indicated IBNR

Deficiency=max⁡(0,  IBNRtriangle−BEbooked)\mathrm{Deficiency} = \max(0,\;IBNR_{triangle} - BE_{booked})
2Step 2

Classify the reserve deficiency ratio against diagnostic thresholds

DefRatio={0IBNRtriangle≤0DeficiencyIBNRtriangleIBNRtriangle>0\mathrm{DefRatio} = \begin{cases}0 & IBNR_{triangle}\le 0\\ \frac{\mathrm{Deficiency}}{IBNR_{triangle}} & IBNR_{triangle}>0\end{cases}
3Step 3

Recognize management actions only when governance evidence is current

MArecognized=MAcapacity×Gategovernance\mathrm{MA}_{recognized} = \mathrm{MA}_{capacity} \times Gate_{governance}
4Step 4

Calculate the residual deficiency after recognized actions

Residual=max⁡(0,  Deficiency−MArecognized)\mathrm{Residual} = \max(0,\;\mathrm{Deficiency} - \mathrm{MA}_{recognized})

Understand the Reserve Adequacy Diagnostics

Overview

This calculator provides an atomistic reserve-adequacy diagnostic step for technical provisions.[1][2] It compares booked best-estimate reserves against triangle-indicated IBNR, quantifies deficiency or surplus, evaluates materiality, and measures residual deficiency after management-actions capacity.

Input Terms

  • Triangle Indicated IBNR Reserve: Indicated reserve amount from the claims-development calculator.
  • Booked Best-Estimate Reserve: Undertaking’s currently booked best-estimate reserve.
  • Booked Risk Margin: Existing risk margin carried alongside booked reserves.
  • Materiality Threshold Percent: Threshold used to flag material reserve deficiency.
  • Management Actions Capacity: Recognized remedial capacity available for reserve shortfall mitigation.

Technical Rationale

The calculator computes booked and indicated technical-provisions totals, then derives best-estimate surplus/deficit, deficiency amount, surplus amount, and coverage ratio. It evaluates deficiency materiality via a threshold comparison and separately calculates the post-management-actions residual deficiency and adjusted coverage ratio.

Important Notes

  • Atomistic scope only: This calculator does not re-project claims triangles or recalculate risk margin mechanics.
  • Governance support: The material-breach flag is a diagnostic signal for governance review, not an automated accounting override.
  • Dependency: The quality of diagnostics depends on robust upstream triangle inputs and consistent booking basis.

Sources

  1. Directive 2009/138/EC - Art. 77 (Calculation of technical provisions) - EIOPA
  2. Directive 2009/138/EC - Art. 82 (Data quality) - EIOPA

Default values are illustrative sample inputs for navigation, training, and QA. Replace them with controlled data before using the result in capital analysis, governance, or reporting decisions.