FSA developing early warning system for internal models
Insurers' regulatory filings will be used to assess model perfomance
The Financial Services Authority (FSA) is developing a series of ‘early warning indicators’ to monitor insurers’ internal models and solvency capital requirement (SCR) calculation once Solvency II comes into effect.
One of the indicators will be a ratio between the pre-corridor minimum capital requirement (pMCR) and the modelled SCR. The FSA’s preliminary analysis indicates that this indicator could range between 175% and 200% for both life and general insurance business.
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