Standard formula: how different is too different?

Insurers must demonstrate standard formula is appropriate. But what this means is sometimes unclear

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With the biggest insurers in the UK and Europe choosing or being compelled to adopt internal models, the standard formula for calculating the solvency capital requirement (SCR) of Solvency II has taken a back seat. The challenge of approving internal models has absorbed much of regulators’ resources, leaving firms to struggle on their own with interpreting and applying the standard formula. Despite this lack of support, regulators such as the UK’s Prudential Regulation Authority (PRA) and German