A better approach to LDTI model validation

Start adding items to your reading lists:
or
Save this item to:
This item has been saved to your reading list.

In transition , PwC US Jun 13, 2019

PwC describes how insurers can effectively manage their LDTI model validations.

Overview

The insurance industry is under significant pressure to meet US GAAP Long Duration Target Improvement (LDTI) requirements within the current adoption timeline. In PwC’s 2019 LDTI readiness survey, 60% of participating companies expected more work than they anticipated when the standard was issued in August 2018. Virtually all companies favored a delay of the implementation deadline; 91% of respondents expressed a desire for more time to thoroughly validate model developments and perform adequate dry runs.

There are four trends that we see shaping the future development of model risk management (MRM) programs:

  1. Revisiting the definition of “model,”
  2. Shift to validating new models,
  3. Coordinating the three lines of defense, and
  4. Focusing on cost efficiencies.

The pressures companies are under to meet LDTI implementation add to the need to revisit their approach to MRM and accelerate the transition into a future state MRM environment. In this paper, we describe how insurers can manage their LDTI model validations to enhance efficiency, reduce pressure on implementation timescales, and provide management confidence in the accuracy of model results and adequacy of surrounding controls.

To have a deeper discussion, contact:

Henry Essert

Insurance Risk & Regulatory Services Leader, PwC US

Email

Quintin Li

Director, Actuarial Services, PwC US

Email

Radha Srinivasan

Manager, Actuarial Services, PwC US

Email

Contact us

Matt Adams

Matt Adams

US Insurance Practice Leader, PwC US

David Schenck

David Schenck

US Insurance Tax Leader , PwC US

Richard de Haan

Richard de Haan

Global Actuarial Leader, PwC US

Mary Saslow

Mary Saslow

Managing Director, National Professional Service Group, PwC US

Follow us