Lloyd's 2026 Capital Briefing describes a pilot for Partial Internal Models (PIMs), with wider guidance expected after learning and governance review. A PIM is not a shortcut around model standards. It replaces one or more components with a simplified methodology within defined guardrails, while maintaining the suitability of the overall risk framework.
Why proportionality still needs evidence
Proportionality can reduce unnecessary modelling complexity, especially where a risk category is individually immaterial or a standard formula is a reliable representation. It does not remove the obligation to demonstrate that the simplified component remains appropriate for the syndicate's risk profile and decision use.
Read the guardrails as control requirements
The briefing describes principles including maintaining Solvency UK standards, maintaining overall capital, demonstrating initial and ongoing suitability, and retaining meaningful risk insight. Materiality thresholds may help scope the exercise, but they are not permission to ignore dependencies or aggregation effects.
Validation questions
- Does the simplified approach capture the relevant tail and concentration risks?
- Can the managing agent explain where it is conservative, neutral or potentially weaker?
- Are falsifiability criteria defined so that future evidence could show the PIM is no longer appropriate?
- Does the change preserve decision-useful information for underwriting, reinsurance and capital planning?
A good PIM submission is therefore a governance case as much as a mathematical case. Quantica Risk Modelling recommends keeping a clear bridge from the approved full model to the simplified component, including quantified uncertainty and validation ownership. Source: Lloyd's Capital Briefing 2026.