We support companies to submit the application for approval of the use of specific parameters in order to replace a subset of parameters (using the Standard Formula) to the supervisory authority.
In this application, we demonstrate that we are compliant with the following conditions:
- The calibration of the standard formula parameters does not appropriately reflect their risk profile and the use of USPs leads to a more appropriate result
- The data used to calibrate the USPs are complete, accurate and appropriate
- The USPs cannot be used to ‘cherry-pick’ those areas which give the lowest SCR
- The risks covered by the USPs are conceptually the same as those covered by the standard formula parameters
- The underlying assumptions behind the standard formula parameter calibration and behind the USP are the same
The standard methodology provided should enable a robust and reliable estimation of the USP