IRM IMIF group releases tenth thought leadership document: IMIF Model Change

Foreword by Philip Whittingham BA (Hons) MBA ACII CFIRM

In order to gain approval for the use and maintain the approval of an internal model, Solvency II, and indeed other regimes, requires insurers to have a process for managing changes to that model. The rationale is fairly straightforward: regulators do not want to approve a model and then find that it gets changed straight after approval. There needs to be a formalized system of change that incorporates appropriate regulatory oversight and reference, particularly where the change might be significant enough to change the capital requirements of the firm. 

However, while that sounds reasonable and (perhaps) straightforward, the reality and challenges of implementing such a process are far from straightforward. As a result it is rare that I go to a gathering of my peers without the subject of “model change” entering the discussion at some point. And the debate can get quite heated. 

This is exactly, therefore, the sort of territory and subject matter that the IMIF is seeking. If we are to be a group that helps to drive industry practice and consensus, then there is no point in avoiding difficult topics. So, feeling bold after the positive reaction to our last two papers on Operational Risk Insurance and Model Risk, this paper addresses the topic of Model Change. 

It seeks to answer the questions: 

• How should firms define a change to their Internal Model? 

• What constitutes a major model change? 

• At what point should an aggregation of minor changes become a major change? 

• What is the most appropriate governance structure for overseeing model change? 

I would like to thank the members of our project team for their extensive work researching and developing the thinking in this booklet. Our IMIF Steering Committee provided overall project guidance and peer review. 

We are grateful to representatives from the Prudential Regulation Authority (PRA) and the Central Bank of Ireland (CBI), who have enabled us to maintain a continuous and positive dialogue between industry and the regulators on our work. 

I would also like to thank PwC for their leadership on this paper. As a not-for-profit organisation IRM is reliant on enlightened industry support to help us publish documents like this. It is this kind of support that helps us maximise our investment in the development and delivery of world class risk management education and professional development. 

Lastly, I would like to issue a call to all the recipients of the paper: We wish to continue to drive the IMIF and we are constantly seeking new ideas and new members who can contribute to our work. If you feel you can contribute, then please reach out to me or the IRM and we shall gladly accept your support.


Philip Whittingham BA (Hons) MBA ACII CFIRM 

Chair IMIF 

Head of Model Validation and Risk Governance (including Operational Risk), AXA XL

Find out more about our IMIF group here »

Download the full document here:

IMIF March 2019

2019 - Internal Model Industry Forum: Model Change


Available to download:

Internal Model Industry Forum: Model Change