About a-team Marketing Services
The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

A-Team Webinar Discusses Outstanding Challenges in the Countdown to Solvency II Compliance

Subscribe to our newsletter

The January 1, 2016 compliance deadline for Solvency II is just months away, but not all insurers and asset managers are sure they will make the date and some data management problems are expected to remain unresolved as the regulation takes effect.

The countdown to compliance was discussed during a recent A-Team Group webinar entitled Solvency II: The Final Data Management Challenges. The webinar was moderated by Andrew Delaney, chief content officer at A-Team, and included panel members Jonathan Spry, head of insurance advisory at Storm Harbour; Andy Adams, head of financial regulatory solutions EMEA, pricing and reference data services, at Thomson Reuters; and Koen Van Duyse, subject matter expert on regulatory compliance at Collibra.

If you missed the webinar, you can hear a full recording here.

Delaney’s first question asked what kind of shape the industry is in with just a few months to go ahead of the compliance deadline. Van Duyse said most of Collibra’s clients have a Solvency II programme in place and are in good shape, although lack of clarity on some points of the regulation means some issues remain outstanding. Spry suggested firms need to have made significant progress around all three pillars of the regulation if they are to get to where regulators expect them to be on January 1, 2016.

Looking at firms’ readiness for Solvency II more specifically, Adams described a readiness assessment tool developed by Thomson Reuters for insurance firms, asset managers and asset servicers. Cumulative results since the tool was introduced in July 2015 show that only 50% of all respondents are confident in their understanding of EIOPA’s asset data requirements for Solvency II, while 40% don’t believe or aren’t sure whether they will be ready to meet the asset data obligations of the regulation by the compliance deadline. Adams commented: “It is important to get over the finish line in 2016 and meet the first reporting requirements, but then there will be time to perfect compliance.”

In terms of regulatory satisfaction with progress, Spry said, “It is a stretch to describe any regulator as satisfied”, but he did acknowledge that most regulators are comfortable with the level of preparation that is in place, despite a few firms being behind the curve.

Looking at the most onerous aspects of the regulation, the panel members agreed that the funds look-through element is particularly difficult and poses problems including data ownership and management.

Adams explained: “Look-through is a simple concept, insurance firms should know what they are invested in, but look at it in detail and the details are devilish. For example, the more funds of funds there are, the more complex the issue. There needs to be a non-disclosure agreement (NDA) between the insurer and provider of funds, but this is usually put in place at the fund rather than fund manager level. If investments are stable, this is no big deal, but if a fund of funds changes an investment this will cause a cascade of change in look-through and new NDAs will be needed. Should an insurer tell an asset manager to stop trading dynamically? This is a huge problem and there needs to be some kind of limit on look-through, perhaps a percentage of assets that would still provide a real understanding of material risk. As yet, nothing like this has been forthcoming, but something will be needed in 2016.”

On the upside, the panel members agreed that the tripartite template developed jointly by industry organisations in the UK, Germany and France to ease data flow between insurers and asset managers is a sensible approach and a good starting point for firms’ that must conduct look-through. There was also agreement on a likely reduction in the number of data sources that insurers will use, particularly insurers working with a large number of asset managers, but that the role of a reduced number of data vendors is expected to increase in complex cases to ease problems of data harmonisation.

The data management challenges of Solvency II also make data governance a pre-requisite. Van Duyse explained: “Data governance needs to provide more oversight of data sourcing and management processes. Service level agreements and data sharing policies need to be in place, and there needs to be a view of who provides data and who consumes it. We are beginning to see chief data officers in insurance companies.”

Delaney’s final question asked what could happen next. Adams responded: “We don’t know yet whether regulators will be ready to process all the data they receive in March, or whether they will be satisfied by just having the Solvency II process in place, but 2016 will provide both regulators and insurers with experience on which to base changes. Regulators should be ready to look at what level of look-through makes sense and insurers should be able to consider whether they need to change their business models as a result of the requirements of the regulation.”

From a data governance perspective, Van Duyse concluded: “This is not just about regulatory reporting, it is an opportunity to use regulation to get good data quality in place and establish data as an asset.”

Subscribe to our newsletter

Related content


Recorded Webinar: FRTB: What still needs to be done before the global deadline of January 2023?

While implementation of Fundamental Review of the Trading Book (FRTB) regulation has been delayed twice for reasons first of complexity and second of the coronavirus pandemic, the final deadline of January 1, 2023 is less than a year away. For banks in scope of the regulation, the time to put necessary risk infrastructure and data...


MiFID II Hampers Competition in Research Provision, Substantive Survey Finds

Competition in the marketplace for the provision of investment research has been weakened by MiFID II as buy-side firms lean more heavily on their core brokers. That’s the finding of a recent survey of 40 investment managers by research analytics provider Substantive Research. The Substantive Survey, which set out to identify recent research pricing trends...


TradingTech Summit Virtual (Redirected)

TradingTech Summit (TTS) Virtual will look at how trading technology operations can capitalise on recent disruption and leverage technology to find efficiencies in the new normal environment. The crisis has highlighted that the future is digital and cloud based, and the ability to innovate faster and at scale has become critical. As we move into recovery and ‘business as usual’, what changes and technology innovations should the industry adopt to simplify operations and to support speed, agility and flexibility in trading operations.


Regulatory Data Handbook 2021/2022 – Ninth Edition

Welcome to the ninth edition of A-Team Group’s Regulatory Data Handbook, a publication dedicated to helping you gain a full understanding of regulations related to your organisation from the details of requirements to best practice implementation. This edition of the handbook includes a focus on regulations being rolled out to bring order and standardisation to...