FSIs for Insurance

Quantitative soundness indicators for the insurance sector can be presented within a CARAMELS (Capital adequacy, Asset quality, Reinsurance, Adequacy of claims and actuarial, Management soundness, Earnings and profitability, Liquidity, and Sensitivity to market risk) framework. This framework is analogous to the CAMELS framework for the banking sector. Das, Davies, and Podpiera (2003) propose a set of core and encouraged soundness indicators for the insurance sector (grouped separately for life and non-life insurance). The core indicators presented in table 2.5 are those considered necessary for adequate surveillance of the sector whereas the encouraged set includes additional indica­tors that are useful in monitoring more specific areas of vulnerability.

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