1. Insurance and reinsurance undertakings shall use methods to calculate technical provisions which are proportionate to the nature, scale and complexity of the risks underlying their insurance and reinsurance obligations.
2. In determining whether a method of calculating technical provisions is proportionate, insurance and reinsurance undertakings shall carry out an assessment which includes:
(a) an assessment of the nature, scale and complexity of the risks underlying their insurance and reinsurance obligations;
(b) an evaluation in qualitative or quantitative terms of the error introduced in the results of the method due to any deviation between the following:
(i) the assumptions underlying the method in relation to the risks;
(ii) the results of the assessment referred to in point (a).
3. The assessment referred to in point (a) of paragraph 2 shall include all risks which affect the amount, timing or value of the cash in- and out-flows required to settle the insurance and reinsuran
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