Non-Life Subsidence Risk

Overview

This calculator implements the gross capital requirement for the Subsidence Risk sub-module within the Solvency II Non-Life Underwriting standard formula.^[1] The Subsidence Risk requirement is defined as the economic capital necessary to cover the loss in basic own funds resulting from an extreme, low-frequency 1-in-200 year subsidence hazard.^[2]

Input Terms

• Sum Insured (Gross): The total value of property exposure insured against subsidence damage in each geographical zone (e.g., France).^[1]
• Specified Geographical Factor: The regulatory factor (e.g., Q_subsidence) representing the 1-in-200 year ground-movement severity for each designated zone.^[3]

Technical Rationale

The Subsidence Risk sub-module is calibrated to a 99.5% confidence level over a one-year horizon. It captures the sensitivity of the undertaking’s basic own funds to catastrophic ground movement caused by the downward settlement of the ground's surface. The standard formula uses a geographical scenario-based approach, summing the results for each hazard zone after applying the specified diversification rules between zones.^[1]

The calculation first multiplies the exposure in each zone by the prescribed subsidence severity factor. These results are then aggregated using the correlation matrix provided in Annex IX. Subsidence risk is typically a more gradual and localized hazard than windstorm or earthquake, but it can cause widespread and expensive property damage in vulnerable geographical areas. The final result represents the gross subsidence component before diversification in Natural Catastrophe Risk.

Important Notes

• Stress-ledger evidence gate: Stressed basic own funds must be backed by a full balance-sheet revaluation flag and model-run evidence flag. The capital result remains the visible loss in basic own funds, while the governance-breach output flags unsupported stress inputs for review. Use `underwriting-stressed-bof-loss-bridge` when the valuation delta needs to be inspected as its own atomistic calculator.
• Geographic Scope: Subsidence risk is often a significant driver for undertakings with large property exposures in specific countries like France, where it is a formally recognized natural catastrophe category.
• Gross vs. Net SCR: This calculator determines the standalone Non-Life Subsidence Risk SCR on the visible stressed basis. Even where the page already reflects direct own-funds or tax effects, Solvency II risk is only finalized as a net impact on Basic Own Funds after diversification in Non-Life Risk, then within BSCR, and after the top-level LAC TP and LAC DT adjustments.
• Regulatory deviation: Material deviation from standard-formula assumptions at this layer may support a capital add-on or a move toward an internal model where justified.^[4]
• Reporting: The displayed result is intended to support the corresponding standard-formula component feeding the S.25.01.01 standard-formula reporting view.^[5]