There is model risk associated with every model. Although this is a well-known fact and extensively covered in the literature, recent developments in insurance regulation, information technology and insurance product design have raised the awareness of model risk and the need to appropriately manage models.
Models have been used in the insurance industry for a long time as many participants have acknowledged the value of models in decision-making processes. In general models provide a common language about risk and returns associated with a business transaction. This paper intends to contribute to the recent discussions on managing company specific models by formulating a number of best practice principles to model management. Furthermore this paper reveals how CRO Forum companies have implemented model management frameworks. The conclusions on the current status of model management frameworks are supported by results from a survey which was conducted among the CRO Forum members in 2016.