Minimum Capital Requirement (MCR)

Minimum Capital Requirement (MCR) is the smallest amount of financial resources an insurance company must hold to operate safely and meet its policyholder obligations. It acts as a financial safeguard, ensuring the company can cover unexpected losses and continue paying claims even during tough times. Regulators set the MCR to promote stability in the insurance industry, preventing companies from taking excessive risks that could jeopardize policyholders’ interests. Essentially, it’s a buffer that helps maintain trust and security within the insurance market.