The Financial Services Authority (FSA) has published an update for firms on the internal model approval process (IMAP) for Solvency II. The update has been sent out in order to provide information on key developments as the FSA prepares to begin the 'pre-application' process for model approval.

Solvency II will allow firms to apply an internal model for the calculation of their Solvency Capital Requirement (SCR) as long as supervisory approval is given.

The FSA is currently preparing to carry out 'firm-facing' IMAP activity from April this year and expects to be working with firms on the pre-application process during the second and third quarters of 2010.

The IMAP update provides: information on the pre-application qualification criteria; a report on the progress of a series of pilot exercises undertaken to test the FSA's planned approach to pre-application; an update on the FSA's thematic review of key aspects of the use of internal models; and, an overview of CEIOPS advice to the European Commission on internal model approval.

The FSA has also published on its website a pre-application qualifying criteria template and thematic questionnaire which considers risk management, the use test, data management and validation including valuation of assets and liabilities.

For further information: FSA publishes Solvency II IMAP update