At Morgan McKinley we encourage partnership through knowledge. Our Senior Appointments Business Partner Susan Kelly has reached out to a specialist in the area of Solvency II to help in imparting high level expertise in the area of Solvency II. Through a series of blogs Alan Lush will take us through the challenges surrounding Solvency II and its ongoing impact on your business. This is Alan's second blog on the topic.
“Data, data everywhere...” (with apologies to Samuel Coleridge Taylor !)
One of the most challenging aspects of implementing Solvency II is undoubtedly the issue of data. The original directive said very little on the subject, but by the time the Delegated Acts (Commission Delegated Regulation (EU) 2015/35) appeared in 2014, things had moved on considerably.
EIOPA requires insurers to have very tight controls over the accuracy, timeliness and appropriateness of all data that goes into the calculation of Technical Provisions, and hence into the SCR calculation. While this is to some degree open to interpretation by the insurers themselves, evidence is emerging that regulators will expect to see at least all of the following in relation to this data:-
These are extremely difficult for insurers to achieve for several reasons:-
Where do we start?
By now, you should have made significant inroads into the issue of Data Quality, and may already have some or all of the following in place:
There is very little doubt that this is one of the most challenging aspects of the new regulatory regime for insurers. Regulators will be vigilant in their assessment of compliance with the requirements, with those found wanting being subjected to capital add-ons until the issues are resolved to their satisfaction.
Next time we will be looking at an often overlooked aspect of the Solvency II Directive – but one which has the ability to cause considerable difficulty for those who are unaware of it.
Alan Lush is a Senior Consultant in the Financial Services industry who has been focusing on Solvency II for the past 5 years. He has assisted in the preparation of a total of six Irish insurers for the advent of the new regulation, including those on both Standard Formula and Internal Model. Prior to involvement with Solvency II, Alan worked on implementing the Capital Requirement Directive (Basel II) for a number of Irish financial institutions. Alan has a long career in consulting both locally and internationally having worked for many years with IBM's Business Consulting Services and International Financial Services Solution Centre.