/

Nematrian Reference Library

[this page | back links]

Set out below is information (held by the Nematrian website) on the reference you have selected

Introduction "This note provides educational material for those responsible for constructing, using and approving the use of models to assess and manage risk and capital within insurance enterprises (insurers). This material is also useful to those who rely upon the information derived from models, as an aid to understanding the derivation, uses and limitations of this information. Internal models are primarily relied upon by boards of directors and senior management for strategic planning, regular monitoring of risk and managing an insurer’s corporate capital. Internal models are also coming into use for determining regulatory required capital, usually subject to supervisory approval based upon satisfaction of specific conditions required by the supervisor. The International Association of Insurance Supervisors (IAIS) has a standard “On the Use of Internal Models for Regulatory Capital Purposes.” A guidance paper on the same topic provides IAIS members with additional guidance. This note first discusses the necessary grounding of internal models in the corporate risk management philosophy and governance of the organization, and then continues with a description of the design, construction, review and use of such models. This note is meant to be flexible enough to allow for future developments in this rapidly evolving field. The use of models often brings the challenge of dealing with their being “black boxes.” Lack of transparency can result in either an unjustified reliance on output from the model or complete scepticism of the model and rejection of valid results. Thus, this note will identify elements needed to discipline the design, construction, validation and use of internal models as well as the communication of results. The application of these elements will help to indicate the extent to which increased reliance can be placed on the model’s results, its limits and its uses."

See here to choose a new Category/Sub-Category or here for a list of all references held by the Nematrian website. Please contact us if any of the above material is inaccurate or if there are references you think should be included that we have excluded or vice-versa.

---