Article 238
1.
The option referred to in Article 122 of Directive 2009/138/EC to use a different time period or risk measure than that set out in Article 101(3) of that Directive shall apply both to the internal model as a whole and to different risk categories or major business units within that internal model.
2.
The requirement to demonstrate the protection provision for policy holders referred to in Article 122(3) of Directive 2009/138/EC shall include evidence that the approximations referred to in that Article do not introduce a material error in the Solvency Capital Requirement or do not lead to a lower Solvency Capital Requirement than that which is calculated in accordance with the requirements set out in Article 101(1) of that Directive.
Where the approximations are based on the rescaling of modelled risks, the undertakings referred to in Article 122(3) of Directive 2009/138/EC shall demonstrate that the rescaling does not impair the outcome of the approximations.
Where the time period of the risk measure used is different from the one provided in Article 101(3) of Directive 2009/138/EC, the undertakings referred to in Article 122(3) of that Directive shall take into account all of the following:
(a)
whether events are equally distributed over time and if not, how it is reflected in the approximations;
(b)
whether all significant risks over a one year period are properly managed;
(c)
where the time period used is longer than that provided in Article 101(3) of Directive 2009/138/EC, whether due consideration to the solvency position during that time period has been given by the undertaking;
(d)
whether the time period used is appropriate taking into account the average duration of the liabilities of the insurance or reinsurance undertaking, the business of the undertaking and, where relevant, the uncertainties associated with long time periods;
(e)
any assumptions made in the approximations about the dependencies between risks over consecutive periods of time.
3.
Insurance and reinsurance undertakings shall demonstrate the level of protection required by Article 122(3) of Directive 2009/138/EC once a year and each time the risk profile of the insurance or reinsurance undertaking changes significantly.
4.
The approximations referred to in Article 122(3) of Directive 2009/138/EC shall be considered to be part of the internal model.