Internal Model for the optimal management of business decisions and risks

Internal  Model  for the optimal management of business decisions and risks


INTERAMERICAN was founded in 1969. Ιn 2001 the company was incorporated in one of the top European financial groups, ACHMEA. INTERAMERICAN is a leader in the insurance market in Health and Assistance Services, whilst is being included among the top companies in Life and Pension insurance sectors.


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Objective Action

The development of the Internal model aims at the optimal management of business decisions and risks and consequently at the successful implementation of INTERAMERICAN’S Sustainable Development Strategy.


Target Audience



The development of the model started back in 2010, the official application for approval was filed in May 2015, and the final approval by the supervisors was announced in the end of 2015. The model has been used for the calculation of regulatory capital requirements as of 1/1/2016. An internal partial use for the purposes of taking specific decisions has been in place for at least these past three years.


INTERAMERICAN is one of the very few organisations in Greece that have incorporated social responsibility in their business strategy and their daily operations in social responsibility.  As part of its strategy, INTERAMERICAN has entered into commitments and develops actions whose purpose is to ensure a successful path towards Sustainable Development. Taking into consideration that the needs and expectations of Interested Parties inform the design of the Company’s corporate strategy, the main axis of the demands of INTERAMERICAN stakeholders is the optimal management of business decisions and risks, the governance and transparency practices it implements and the protection of its clients - insurance holders

In order for the Company to respond to the demands of its stakeholders and to optimise its grasp, evaluation and management of the risks it takes, as well as to achieve optimal management of business decisions, it has moved to the development and implementation of the Partial Internal Model.

The development of the Internal Model in particular allows INTERAMERICAN to optimise the management of the risks it takes in non-life sectors and to set itself apart from the average European -and Greek- insurance company, which uses the “Standard Formula” Through the use of the Model INTERAMERICAN expects to commit the most representative height of the required shareholder capital and to further shield its clients, while at the same time remaining competitive.

It should be pointed out that recently the Company has also received the approval of the Bank of Greece for the use of a Partial Internal Model for the calculation of the capital requirement for solvency. 

The possibility to gain the approval for the development and use of an Internal Model is an innovation of Solvency II.

It should be pointed out that: Solvency II is the most recent institutional framework which regulates capital adequacy, operation and supervision requirements for insurance companies which operate in the European Union. One on the principal objectives of Solvency II is the introduction of new governance and transparency practices that will ensure the sound operation of the market and the appropriate level of protection for European citizens - insurance policy holders!

The Model, which was developed these past years in the Netherlands and in Greece, has been evaluated by auditors and found to meet the requirements of the Solvency II directive, and INTERAMERICAN is the first - and to this day only- company operating in the Greek insurance market to have received the relevant approval.

In particular, the Partial Internal Model provides INTERAMERICAN with coverage against the category of risks directly related to Non-Life Underwriting Risk. The category in question focuses on two types of risk:

  • The Premium & Reserve Risk, where

-the Premium Risk Model quantifies uncertainty concerning losses to incur in the near future, either due to increased frequency or to increased average cost, or to both
-the Reserve Risk Model quantifies uncertainty in terms of time and of the final cost of the company’s outstanding claims.

  • CAT Risk, which following one or several incidents that bring about losses in more that one insured items, leads to a significant deviation in real losses in relation to anticipated losses. In Greece, CAT Risk is linked to natural disasters (resulting from climate change) and above all to earthquake activity.


Impact on Society

The implementation of the model, allows Interamerican to achieve its objectives while at the same time meeting performance requirements set by its shareholders.

  • By proposing a fair premium to its clients 
  • By specifying the level of participation of reinsurers at a height compatible to that of the risk it wishes to maintain
  • By ensuring full coverage of obligations arising from its insurance policies, and therefore protecting its clients.

Based on the calculation of capital requirements as of 31/12/2015, Interamerican achieves its solvent operation through capital which is lower by almost 40 million in relation to what the Standard Formula would indicate. The Standard Formula is a method imposed throughout Europe to an average insurance company which has not been given by the supervisory authorities an approval for the use of its own model. The whole of the Greek market, with the exception, of Interamerican, uses this method.

Initiative Location

It is implemented by Interamerican in Greece with the results being also consolidated at the ACHMEA Group level in the Netherlands.

Working with Organization

The Partial Internal Model of INTERAMERICAN was developed in cooperation with Achmea, the mother company.

During the preparation process of the official application for the approval of the model, in a period of 5 years some 50 meetings with the Bank of Greece, which is the Supervisory Authority, were required, with the participation of DNB, the corresponding Dutch Supervisory Authority.


Workers Participation

Employee participation is a defining factor in the effective implementation of the Internal Model. The participation is not limited to the people involved in the technical development of the model, but also extends to a wide range of trainees in the model’s principles of operation (in order to include specific aspects of their daily practice), and to direct or indirect users - recipients of the results.


Benefits for Οrganization

The benefits from the implementation of INTERAMERICAN’s approved Internal Model include:

  1. Improved illustration of the company’s different risk profiles
  2. Optimal management of business decisions, e.g. pricing and reinsurance structure
  3. Calculation of capital requirement for solvency Through the use of the Internal Model INTERAMERICAN expects to commit the most representative height of required share capital.

Connection with Global Goals

No Connection with Global Goals found

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