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Optimising capital model validation resourcing

Insurance Capital modelling and validation

Many insurers have recently found capital model validation challenging from a resourcing perspective. We have just published a report, in association with Eames Consulting, on how you can address the challenge.

Our market review shows that 56% of respondents agree or strongly agree that there is a lack of suitable candidates for capital model validation roles. More broadly, two-thirds of respondents expect actuarial resourcing shortages to last for at least the next three years. Given that validation resourcing relies heavily on actuarial expertise, validation resourcing shortages also look set to continue for some time.

Our report focuses on practical solutions you can implement within your firm, and includes five key takeaways to optimize your validation resourcing based on our up-to-date insights:

  1. People: Ensure the validation team (including both internal and external components) has the right people with the right knowledge and skills to perform the validation, and create a plan for resourcing over the long term.
  2. Contingency: Create a contingency resource plan, including external resource, to address the risk that work planning, recruitment or retention do not go as expected.
  3. Front-loading: Determine which aspects of the validation can be done early to help spread the workload over time.
  4. Deadlines: Set clear interim milestones and, if these become problematic, promptly adjust plans and resourcing to avoid placing undue pressure on regulatory deadlines.
  5. Culture: Develop a supportive and collaborative culture and keep abreast of market trends in compensation, benefits and hybrid/flexible working to retain key staff.

Please contact us to discuss how you can optimise your validation process.