Insurance (prudential standard) determination No. 3 of 2012 - Prudential Standard GPS 113 - Capital Adequacy: Internal Model-based Method
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Turn the raw legal text into a practical explanation grounded in Insurance (prudential standard) determination No. 3 of 2012 - Prudential Standard GPS 113 - Capital Adequacy: Internal Model-based Method.
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Terms that are defined in GPS 001 appear in bold the first time they are used in this Prudential Standard.
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For the purposes of this Prudential Standard:
(a) ‘Economic Capital Model’ (ECM) means the internal capital measurement model developed for a regulated institution’s own purposes;
(b) ‘Regulatory Capital Model’ (RCM) means the particular implementation and application of the ECM that is to be used for the purpose of determining the prescribed capital amount using the IMB Method; and
(c) A ‘business segment’ is any part of the insurance business for which:
(i) if the segment is covered by the ECM, both the method of modelling underwriting and reserving risk and the outcomes from the modelling are separately identifiable for that segment; and
(ii) if the segment is not covered by the ECM, the means of determining its overall contribution to the prescribed capital amount, and the amount of that contribution, are separately identifiable.