risk-based capital requirements RBC

Risk-based capital requirements refers to a method developed by the National Association of Insurance Commissioners to determine the minimum amount of capital required of an insurer to support its operations and write coverage.

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The insurer's risk profile (i.e., the amount and classes of business it writes) is used to determine its risk-based capital requirement. Four categories of risk are analyzed in arriving at an insurer's minimum capital requirement: asset, credit, underwriting, and off-balance-sheet.