Capital allocation

{
  "id": "MLC-T-INS-000670",
  "term": "Capital allocation",
  "field": "Insurance and risk management",
  "definition": "The process of assigning a firm's financial capital to its different business units, product lines, or specific risks. Insurers use this process to determine how much capital should support each line of business, such as property, casualty, or life insurance, based on the risks inherent in each. Common allocation methods include proportional approaches based on premiums or reserves, and more sophisticated techniques using risk measures like Value at Risk (VaR).",
  "url": "https://mlchart.com/terminology/insurance/capital-allocation/"
}