Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to:

1. (1) a UK Solvency II firm; and
2. (2) in accordance with Insurance General Application 3, the Society.

1.2

In this Part, the following definitions shall apply:

coverage

means the risks that are reflected in the probability distribution forecast generated by the internal model.

internal model safeguard

means a limitation or requirement imposed by the PRA on a firm, whether in its internal model permission, under section 55M FSMA or otherwise, which either or both:

1. (1) to the extent that a residual model limitation relates to Solvency Capital Requirement – General Provisions 3.3 to 3.4, is intended to ensure compliance of the internal model with those provisions; or
2. (2) to the extent that a residual model limitation relates to the internal model requirements, is intended to mitigate the effect of that residual model limitation.

residual model limitation

means, in relation to an internal model for which a firm has, or in respect of which the firm is applying for, an internal model permission, an aspect of that internal model that prevents the firm from demonstrating that that internal model meets Solvency Capital Requirement - General Provisions 3.3 and 3.4 and all internal model requirements in all the circumstances in which it is, or is intended, to be used.

unit of the partial internal model

means a component of the partial internal model that is separately calculated and not aggregated within the partial internal model.