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      Question

      At 31 Mar, management projects a worst-case stress

      showing net technical provisions plus URR exceed current solvency margin by 10%. Regulator requires prompt remedial plans. Which immediate action is most appropriate while preparing a remediation plan?
      A Do nothing—wait for the next reporting period. Correct Answer Incorrect Answer
      B Immediately halt new business until solvency restored. Correct Answer Incorrect Answer
      C Notify regulator, prepare an action plan (capital injection, reinsurance, premium increase), and maintain business under regulator oversight. Correct Answer Incorrect Answer
      D Transfer policy liabilities to a related party at book value. Correct Answer Incorrect Answer
      E Recognise additional deferred tax to offset the deficiency. Correct Answer Incorrect Answer

      Solution

      Regulatory regimes require timely notification and remedial plans if solvency tests fail or coverage weakens. Immediate halting of business may be disproportionate; instead a formal action plan (capital, reinsurance, underwriting changes) and engagement with regulator is appropriate.

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