Solvency II continues to trouble insurance firms and asset managers, with many insurers still using manual workarounds and struggling to get the fund look through element of the regulation right despite the elapse of nine months since the compliance deadline on January 1, 2016.
The ongoing pain points and potential benefits of a successful Solvency II implementation were the subject of a recent A-Team Group webinar providing a Solvency II update and considering how effectively firms are meeting the regulatory data requirement. The webinar was hosted by A-Team editor Sarah Underwood and joined by Andy Adams, head of financial regulatory services for EMEA at Thomson Reuter; Chris Johnson, head of product management, Market Data Services at HSBC; and Dennis Slattery, CEO at EDMworks.
The panel kicked off with a state of play report on Solvency II, noting that while firms subject to the regulation have compliance solutions in place, they are not necessarily running well and more work is needed. A poll of webinar participants reflected these views, with 50% of respondents still using numerous manual workarounds, 33% using a few manual workarounds, 11% implementing an automated solution and 6% having implemented an automated solution.
Pain points reported in a second poll include the fund look through element of the regulation, reporting, governance requirements and capital calculations. Considering the look through element, the panel agreed that the tripartite template has helped somewhat, but problems persist in gathering and managing large volumes of data that are often inconsistent.
Focussing on reporting, Adams described the difficulty of gathering all the data required for quarterly reporting and said this will only become more difficult as the European Insurance and Occupational Pensions Authority (EIOPA) gradually reduces the number of weeks in which reports must be made from eight weeks in 2016 to five in 2019. One solution offered by Adams is to change the data requirement to cover data that is one-month old and therefore easier to gather, but suggestions along these lines have previously been rejected by regulators.
Looking at the upside of Solvency II, a third poll showed many firms that have implemented compliance solutions gaining some operational and business benefits. These include the ability for insurers to clean up balance sheets on the basis of better data, develop master data files that ease reporting, and spin-off other data management tasks such as the creation of shareholder disclosure reports.
To find out about:
- Progress on Solvency II
- Outstanding pain points
- Potential solutions
- Beneficial outcomes
You can listen to the webinar here.