We report progress in development of the fault diagnostic and prognostic (FD&P) system for large segmented solid rocket motors (SRMs). The model includes the following main components: (i) 1D dynamical model of internal ballistics of SRMs; (ii) surface regression model for the propellant taking into account erosive burning; (iii) model of the propellant geometry; (iv) model of the nozzle ablation; (v) model of a hole burning through in the SRM steel case. The model is verified by comparison of the spatially resolved time traces of the flow parameters obtained in simulations with the results of the simulations obtained using high-fidelity 2D FLUENT model (developed by the third party). To develop FD&P system of a case breach fault for a large segmented rocket we notice [1] that the stationary zero-dimensional approximation for the nozzle stagnation pressure is surprisingly accurate even when stagnation pressure varies significantly in time during burning tail-off. This was also found to be true for the case breach fault [2]. These results allow us to use the FD&P developed in our earlier research [3]-[6] by substituting head stagnation pressure with nozzle stagnation pressure. The axial corrections to the value of the side thrust due to the mass addition are taken into account by solving a system of ODEs in spatial dimension.