Regulatory & Standards Reference

What this means for you: PRA-regulated insurers and reinsurers must have documented model risk management frameworks covering cat models. This includes model validation, limitations documentation, use test evidence (demonstrating the model output is actually used in underwriting and capital decisions), and governance sign-off. For cat modellers, this means your model limitations documentation, vendor model change management process, and model validation results need to sit within a formal governance framework that satisfies the PRA's expectations.

What this means for you: EU insurers and reinsurers using the standard formula must apply EIOPA's prescribed scenarios and correlation factors rather than their own models for the regulatory capital calculation. Firms using internal models for cat SCR must demonstrate that the internal model produces comparable or more conservative results than the standard formula for calibration evidence purposes. The standard formula scenarios also serve as useful benchmarks for comparing vendor model outputs.

What this means for you: The ORSA requires firms to assess their own risk profile including cat risk beyond the standard formula. Cat modellers contribute to the ORSA by providing stressed loss scenarios, sensitivity analysis, and model uncertainty quantification. The EIOPA guidelines set expectations for scenario coverage (including non-modelled perils), stress testing severity, and documentation standards for the ORSA cat risk section.

What this means for you: Australian-licensed insurers must have documented processes for identifying and measuring cat accumulations, assessing reinsurance program adequacy against cat scenarios, and governing the use of cat models in pricing and capital decisions. APRA supervisors review cat risk management as part of regular prudential reviews your model governance framework, scenario library, and reinsurance analysis need to be documented and defensible. Critical reading for any cat modeller or risk manager at an Australian-regulated entity.

What this means for you: Singapore-licensed general insurers must maintain adequate capital against cat risk exposures and have documented reinsurance programs that demonstrate cat risk management. MAS's risk-based capital framework (RBC2) includes explicit cat risk charges. For practitioners working at Singapore-based (re)insurers or managing Singapore portfolios, understanding the MAS cat risk capital treatment is essential for pricing and portfolio management decisions. Singapore's position as a regional reinsurance hub makes MAS regulation relevant across the wider Asian cat market.

What this means for you: India's cat regulatory framework is at an earlier stage of development than Lloyd's, Solvency II, or APRA equivalents. IRDAI has issued circulars on catastrophe reserving but has not yet implemented a fully developed internal model or standard formula framework equivalent to Western markets. The current requirement focuses primarily on catastrophe reserves and basic accumulation management rather than sophisticated model governance. Practitioners working in the Indian market should reference the most recent IRDAI circular rather than expecting a comprehensive framework and should note that this is an actively evolving area as India's insurance market develops.

What this means for you: US state regulators review cat model use in rate filings particularly in cat-exposed states like Florida, Texas, Louisiana, and California. The model used must be appropriate for the territory and approved or accepted by the relevant state regulator. Florida is the most prescriptive the FCHLPM (see below) specifically approves which models can be used for Florida residential rate filings. Understanding which models are regulator-approved in your key states is a prerequisite for US admitted market cat pricing work.

What this means for you: If you are pricing Florida residential property cat risk for use in admitted market rate filings, you must use an FCHLPM-approved model currently includes RMS, AIR/Verisk, and CoreLogic models among others. The FCHLPM publishes detailed technical standards that approved models must meet. Understanding these standards gives practitioners insight into the minimum quality bar for professional-grade hurricane modelling. The FCHLPM approval list and standards documentation are freely available and worth reading even for E&S market practitioners who are not bound by the requirement.

What this means for you: Cat modellers are increasingly asked to provide physical climate risk inputs to TCFD disclosures specifically, how climate change affects the frequency and severity of natural catastrophe events in the insured portfolio over 1, 5, and 10-year horizons. The TCFD scenario framework (1.5°C, 2°C, 4°C warming pathways) provides the boundary conditions for these assessments. Primary cards on the Climate page.

What this means for you: IFRS S2 requires insurers to disclose how climate-related physical risks increased frequency and severity of nat cat events affect their underwriting strategy and financial results. This creates a direct link between cat model outputs and public financial disclosures. Cat modellers at IFRS-reporting entities will increasingly be asked to provide climate-adjusted loss estimates and scenario analysis for the S2 disclosure. Primary cards on the Climate page.