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Daily Insurance Industry News
Sunday 25th of February 2018
February 21, 2011

Aon advocates simplified Model Approval process

by Gill Montia

Story link: Aon advocates simplified Model Approval process

Aon advocates simplified Model Approval process

Aon Benfield is calling for a simplified Internal Model Approval Process for natural catastrophe risk, arguing that it would encourage insurers to better quantify these exposures under Solvency II.

The current Solvency II framework gives the insurer the option of using either a standardised scenario approach or developing a partial internal model for natural hazard risks.

However, Aon states that the approval process for the partial internal model can be costly and onerous, for both regulators and re/insurers.

The firm is therefore lobbying the European Insurance and Occupational Pensions Authority for a change to the current process, which it believes would allow more re/insurers to realise the benefits of a partial internal model.

Aon’s head of international catastrophe management, Paul Miller, explains: “The use of CRESTA zone data in exposure calculations was common 15 years ago, but now most insurers and reinsurers use far more detailed data.”

He adds: “The Solvency II Standard Formula does not recognise this evolution so re/insurers receive a higher risk profile and more onerous capital requirements.”

Last month, Europa Technologies announced a major upgrade to its CRESTA zone product.

Developed in partnership with, Michael Bauer International, the firm’s new Global CRESTA Plus offering comes with a gazetteer of over 850,000 locations, pre-coded with the CRESTA zone and sub-zone, and support for place names in a number of languages, including simplified Chinese.

 

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