What does SCR stand for?

The proposals are similar to the Basel II framework on capital adequacy for banks in that they are based around three pillars: the first pillar relates to the calculation of solvency capital requirements and minimum capital requirements using standard or internal models; the second pillar refers to general regulatory principles governing risk and controls; and Pillar 3 describes required disclosure on the institution's solvency and financial situation.

The Solvency II Handbook provides an introduction and deeper look into the Solvency II framework, exploring in detail the current practices within the insurance industry and the impact of Solvency II; looking at what the issues and challenges of building an internal model are, risk management implementation as it is and, crucially, the regulatory perspective on calculating solvency capital requirements.

The ability of Bermuda (re)insurers to adopt their own internal models in determining RCR as opposed to adopting BSCR, reflects a similar approach to that adopted by the European Commission and its working group under the draft Solvency II provisions in respect of Solvency Capital Requirements ("SCR").

The solvency capital requirements must be maintained by the insurer at all times, this being a standard condition imposed on the registration of every insurer.