Own view of risk
An insurer's documented position on its loss distribution, reached by validating and adjusting external models rather than taking them as true.
Own view of risk is what an insurer holds to be true about its possible losses, after testing the models it buys against its own claims, engineering studies and the scientific literature, and after adjusting whatever did not stand up. It differs from the raw output of a vendor model, which the whole market shares and which therefore gives no one either an edge or an excuse. Prudential regimes expect it without always naming it: an internal model under Solvency II must be used in decisions and not only for the calculation, and the own risk and solvency assessment asks the undertaking for its own appraisal of its profile. It is also a commercial advantage, since an underwriter with an own view can write where others withdraw for lack of one. Its risk is symmetric: an adjustment that lowers capital must be more solidly proven than one that raises it, hence the requirement for independent validation.
Hypothetical case: a reinsurer finds over ten years that its European hail losses exceed what the market model predicts by 40 percent. It raises the vulnerability curves for its roofs, documents the gap claim by claim and has it validated by a team independent of underwriting: the figure it retains is now its own.
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