Ceiops uncovers internal model take-up

Research conducted by Ceiops as part of its QIS 4 exercise found that 63% of respondents intend to use full or partial internal models to calculate their Solvency Capital Requirement (SCR). Based on these results, from about half of the insurers that participated in QIS 4, 13% of respondents said they have no plans to use an internal model and will use the standard formula while 24% have yet to decide. Ceiops said many firms considered the standard formula to work well but for the firms that tested their internal models the majority (72%) found that their SCR will decrease and just under half reported a potential decrease of more than 20% in the SCR using their internal model over the standard formula.