Other statistical quality standards

(1) Dependencies within risk categories, and between risk categories in respect of diversification effects, may be taken into account in the internal model where the systems for measuring diversification effects are appropriate.
(2) The effects of risk-mitigation techniques may be taken into account in the internal model where credit risk and other risks arising from the application of the risk-mitigation techniques are appropriately reflected.
(3) Material risks arising from financial guarantees and contractual options must be precisely assessed. In addition, risks arising from options in favour of policyholders and other insurance undertakings must be assessed. The effects of future changes in financial and non-financial conditions on the exercise of these options must be taken into account.
(4) Future management actions that could reasonably be expected to be taken under specific circumstances may be reflected in the internal model. The time required to implement such actions must be taken into account.
(5) Expected payments to policyholders must be taken into account in the internal model, whether or not they are contractually guaranteed.