Throughout our series of articles on Solvency II, we have looked
at the challenges that face the insurance industry if they are to
fully comply with the new directive.
Data Management, valuation
of assets and liabilities and risk analysis are all
issues to be addressed, but there is one aspect that we have not
yet covered that lies at the heart of everything.
The disclosure issue
As we have explored the requirements of Solvency II, one thing
has become very apparent - the new directive will require a
substantial amount of reporting produced to short deadlines.
In our post 'Solvency II -
Meeting the Challenges Head-on', we discussed the notoriously
heterogeneous IT landscape of the insurance industry that will make
compliance to this particular pillar a huge challenge.
The reports required under the new directive will be both
qualitative and quantitative and will either be in a specified
standard format or ad-hoc in nature.
To ensure compliance, insurers will have to make vast
improvements to their IT infrastructure. Most likely, this will
involve looking at the existing systems, integrating them where
possible and investing in powerful business intelligence reporting
tools. This will help companies gain access to data, from
numerous sources, to produce reports illustrating an integrated
view of their market position quickly and accurately.
Solvency II - a great opportunity
There is no doubt that Solvency II will have a major impact on
the insurance industry when it comes into force.
There will be some who see it as an unnecessary regulation tying
up their business in yet more red tape. However, the more
progressive companies will see it for what it really is - an
opportunity to improve their business and gain a competitive
advantage within their marketplace.
As we have seen above, the key to successful compliance comes
down to strengthening a company's IT infrastructure by:
By achieving superior risk assessment capabilities in terms of
speed and accuracy, they will have sufficient flexibility within
their solution to think beyond pure regulatory requirements by
considering additional aspects such as liquidity and risk.
Preparing for Solvency II is daunting. But by seeking an
integrated business intelligence solution that can cope with the
delivery of fast and accurate ad-hoc reports, will strengthen a
company's market standing and meet the regulatory timetable.
This Solvency II series was serialised for Risk in the
Market by Sally Ormond from our white paper, 'How To Solve The
Solvency II Challenge'. The full Solvency II white paper can
be downloaded here.
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