Introduction to P&C Risk-Based Capital (RBC) Self-Study

Receive an introduction to Risk-Based Capital (RBC) for Property and Casualty insurance companies, including how RBC came to be, a discussion of the key risks it measures, how the calculation works, computing and interpreting the RBC Ratio, and complying with RBC laws.

This course covers the catastrophe risk charges that were included in RBC beginning in 2017.

CPE Credits: 2 hours in Accounting

Level: Overview

Prerequisites/Advance Preparation
An understanding of common property and casualty industry concepts and terminology is needed. This may be gained from attending our Accounting and Financial Reporting or Annual Statement seminars. Many of these concepts and terms are also discussed in our Introduction to Insurance Accounting & Finance self-study and our P&C Concepts Series of self-study courses.

NASBA Publication/Revision Date: May 2020

Learning Objectives

• Define the purpose of Risk-Based Capital
• Distinguish between the different categories of risk measured by RBC
• Compute a company's RBC ratio
• Differentiate between the four RBC action levels

Outline

• History of Risk-Based Capital
• The Risk-Based Capital Report and Formula
• Categories of Risk
• Calculation of Total Risk-Based Capital and the RBC Ratio
• Compliance Issues Related to Risk-Based Capital