Statistical quality standards for probability distribution forecasts

(1) The internal model must cover all material risks of the insurance undertaking. The risks named in section 97(3) must always be taken into account. Regardless of the calculation method chosen, the classification of risks must be sufficient to ensure that the internal model is widely used in the business organisation, in particular in risk management, decision-making processes, and capital allocation, and plays an important role within the meaning of section 115(1).
(2) Insurance undertakings must at all times be able to demonstrate to the supervisory authority the plausibility of the assumptions underlying the internal model.
(3) The methods for calculating the probability distribution forecast underlying the internal model must be based on adequate, applicable, and relevant actuarial and statistical techniques. They must be consistent with the methods used to calculate the technical provisions.
(4) The calculation of the probability distribution forecast must be based on current and reliable information and on realistic assumptions.
(5) The data used for the internal model must be accurate, complete, and appropriate. The data series used to calculate the probability distribution forecast must be updated at least once a year.