Where Article 88 is complied with, insurance and reinsurance undertakings may calculate the capital requirement for life-expense risk as follows:
\mathrm{SCR}_{\mathrm{expenses}} = 0.1 \cdot \mathrm{EI} \cdot \mathrm{n} + \mathrm{EI} \cdot \left(\left(\frac{1}{\mathrm{i} + 0.01}\right) \cdot \left((1 + \mathrm{i} + 0.01)^{\mathrm{n}} - 1\right) - \frac{1}{\mathrm{i}}\left((1 + \mathrm{i})^{\mathrm{n}} - 1\right)\right)
where:
EI denotes the amount of expenses incurred in servicing life insurance or reinsurance obligations other than health insurance and reinsurance obligations during the last year;
n denotes the modified duration in years of the cash flows included in the best estimate of those obligations;
i denotes the weighted average inflation rate included in the calculation of the best estimate of those obligations, where the weights are based on the present value of expenses included in the calculation of the best estimate for servicing existing life obligations.