Volatility adjustment

(1) With the approval of the supervisory authority, insurance undertakings may apply a volatility adjustment to the relevant risk-free interest rate term structure for the purpose of calculating the best estimate under section 77.
(2) The volatility adjustment may not be applied to insurance obligations where a matching adjustment under section 80 is applied to the relevant risk-free interest rate term structure for calculating the best estimate for those obligations.
(3) Departing from section 97, the Solvency Capital Requirement does not cover the risk of loss to basic own funds arising from changes to the volatility adjustment.