Wednesday, 9 January 2019

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Europe’s largest reinsurers explain the supervisory benefits of using internal models



A group of Europe’s largest reinsurers, the Insurance Europe Reinsurance Advisory Board (RAB), has published an overview of the benefits of insurers’ use of internal models, titled Internal models: a reinsurance perspective.
The benefits include:
  • Making the risk profile of insurers more transparent.
  • Analysing risk in more detail, so that the output of the models more closely reflects insurers’ risk profiles.
  • Enriching insurers’ discussions with supervisors.
Ulrich Wallin, CEO of Hannover Re and chair of the RAB, commented: “This publication addresses criticisms that have been levelled against internal models by supervisors and explains why, for insurers, internal models remain the most accurate measure of their risks, the best driver of good risk management and the most appropriate basis for comparing risks between companies.”

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