Providing data that is clean and ready for solvency ii reporting is simply not an asset managers core competency. The new solvency ii regulatory framework has been widely labelled as a data nightmare for insurance and reinsurance undertakings insurance firms, and rightly so. Solvency ii regulation is pushing hard to improve data quality and data governance data quality the solvency ii regulation highlights the importance of data quality. They need to stay focused on investment management and often dont have the timeor the toolsto generate the intricate data needed for solvency ii. Data points with the data type monetary shall be reported in the reporting currency, which requires the conversion of. Using solvency ii to implement ifrs 17 pwc 3 measurement model both solvency ii and ifrs 17 base the measurement of insurance contract liabilities on the concepts of a probabilityweighted estimate of the future cash flows, the time value of money and an additional allowance for risk. Template a for the disclosure of aggregate statistical data with regard to insurance and reinsurance undertakings supervised under directive 20098ec solvency ii. Solvency ii requirements apply to all data 10 november 2014 policy data demographic data market data asset data liability cash flow model experience investigations assumptions esgsrsgs capital model solvency ii requirements apply to all data. The user privileges to view and edit reports have to be set by the administrator. The data quality requirements apply to all data used in the internal model, i.
Solvency ii does not require this level of granularity in the tracking of movement and so additional data storage and model development are required. With basel ii, we learned we need robust data management to get data in and manage it for calculations. The requirements apply to both internal and external data. Enhancing the macroprudential dimension of solvency ii. Analysis of end2018 solvency ii data indicates that during times of stress, when repo markets might not allow the quick transformation of highquality. It is therefore necessary to introduce a new regulatory. Directive 20098ec of the european parliament and of. Solvency ii directive articles 36, 45 and 246 delegated acts articles 262 and 306 eiopa guidelines on own risk and solvency assessment domestic actuarial regime and related governance requirements under solvency ii published by the cbi sections 2. Solvency ii reporting is required every quarter and annually. Practical implementation challenges of internal models under. The solvency ii handbook deloitte financial services. This page contains templates for the disclosure of aggregate statistical data with regard to undertakings and groups supervised under directive 20098ec.
For many nonlife insurers, the solvency ii data requirements pose. Establish a data policy which sets out the entitys approach to. Pillar i covers quantitative requirements relating to capital rules and investment rules, and will also require data needed to calculate the solvency. Moreover, insurers have to make sure that the external data required to compute and report the solvency capital requirements i. Data quality management is an integrated part of operational management and is embedded as a formal function within the organisation. Solving the data challenges of solvency ii moodys analytics. What are internal models and how do they fit into solvency ii. Solvency ii data requirements focus on ensuring that data used to calculate technical provisions are. The own fund statistics provide an extract of key data items from the solvency ii. Processed data as per solvency guidelines should be available in the database in the required format for the reports to generate.
Best practices for solvency ii readiness and seamless data. Solvency ii has introduced a new set of reporting challenges and requirements for european insurance companies, including an increased level of reporting, enhanced risk disclosures, deeper data granularity, and additional security characteristics. The solvency ii structure is based on three pillars. The system enables us to control and manage the full process of nonfinancial, financial, and consolidated data from local gaap to solvency ii, in a way consistent with our goals and principles. After the board approves the taxonomy in october, eiopa will launch a full public consultation of the reporting templates and the underlying taxonomy. The deadlines for reporting are challenging and get tighter each year during the transition period. From its perspective, the naic sees itself as a standardsetting organization through which the individual states can exercise their specific regulatory authorities. Smaller companies who started later are now in the phase of finalising their solvency ii projects. Our hope is that this guide is an effective help to understand and make others understand the pillars of the new system and the concepts that it adopts. Solvency ii technical provisions for general insurers institute and. Solvency ii is being implemented in 2016 and the new ifrs will follow 2 to 3 years later. Survival skills for senior management in a solvency ii world. According to art 73 of the eiopa regulation referring to language arrangements, eiopa issues its guidelines in all eu official languages with the exception of irish, according to council regulation eu no 12572010.
Solvency ii is the new riskbased regulatory framework for insurers taking effect on 1 january 2016. However, that is not always evident in the current proposals. Solvency regulation 3 as a quasigovernmental entity that exercises too much influence. Given this situation, all data queries from the supervisory authority should serve a clear supervisory purpose in future. Insurance regulation and the challenge of solvency ii. Cch tagetik helped us become compliant with solvency ii regulations and create one main source for reporting. Solvency ii sets out regulatory requirements for insurance firms and groups, covering financial resources, governance and accountability, risk assessment and management, supervision, reporting and public disclosure. This should include a documented record of what is meant making sense of solvency ii the countdown to solvency ii is moving to a decisive stage. Furthermore, data is directly targeted by solvency ii, as it is required to be accurate, complete and appropriatenot to mention traceable. The impact of solvency ii on data management in insurance.
The european council announced this month, june 21, 2011, a proposal to delay implementation of solvency ii to january 1, 2014, subject to european parliament approval. Guidance solvency ii data quality management by insurers. Where possible, you can use existing data quality management standards, for example dama dmbok. Cro guide to solvency ii reinsurance thought leadership. Internal model validation a solvency ii perspective. Larger companies are making progress but are still interested in hearing the views and learning from the experience of others. Getting up to speed solvency ii data and systems 5 key activity and regulatory driver key features of successful data workstreams common issues for struggling data workstream data scoping and prioritization eiopa advises compiling a directory of data used in the internal model, and applying the principle of proportionality when considering data. Clearwater helps insurers fulfill solvency ii regulatory requirements across the three pillars. The solvency ii directive 20098ec regulatory compliance framework has put in place a robust three pillar approach for the regulation of insurance and reinsurance undertakings undertakings operating throughout the european union eu. The original bestselling solvency ii handbook, published in 2009, focused on the theory with a detailed examination of the main requirements and impacts of solvency ii to.
Solvency ii4 solvency ii time line on april 22, 2009, the european parliament approved the solvency ii framework directive, due to become effective january 1, 20. Framework directive 20098eu, introducing the essential principles of the new regime. Solvency ii adjusted services and products to overcome the regulatory burden and to gain new market share. Indeed eiopa requires a data quality management framework and policy to be in.
The solvency ii regulatory framework has different layers at supranational level. The complexity of the data quality and reporting requirements raises a large number of data challenges for insurance firms and their allied asset managers. For solvency ii this data is defined by the final reporting template. This framework consists of the solvency ii directive 20098ec, the delegated acts containing implementing rules for solvency ii, and the associated technical standards. Eiopa publishes statistics based on quantitative solvency ii reporting from.
The impact of solvency ii on data management in insurance consequently, data is an important and wideranging topic in solvency ii. Template b for the disclosure of aggregate statistical data with regard to insurance groups supervised under directive 20098ec. Regulation 201535eu the socalled delegated acts a second level measure, containing detailed measures on the new regime, recently amended by eu delegated regulation 2016467. The tables and charts are available in pdf and excel format and are based on information from the statistics at the publication date. Analysis of all solvency ii data is performed on an aggregated and individual undertaking basis. Solvency ii also requires a strong data management strategy, plus a strong data quality and data governance strategy. Under solvency ii, every insurer is required to identify its key risks e. Solvency ii templates for the disclosure of aggregate. Enhancing the macroprudential dimension of solvency ii february 2020 executive summary 6. Undertakings are required to have a deferred taxes policy under the risk management system. The proposed data queries pertaining to distribution channels are particularly questionable with regard to their intent and purpose. In light of market developments the current system is no longer adequate. The solvency ii directive is the first insurance regulation to introduce strict requirements for data management. Further insights into our reserving policy and solvency ii.
While aware of the inevitable applicative difficulties and areas for improvement, solvency ii provides new and more focused lenses to. Ice solvency ii data support is a combination of high quality reference and pricing data, coupled with proven analytics, can help your firm manage the transition to solvency ii and maintain ongoing compliance. Solvency ii templates for the disclosure of aggregate statistical data yearend 2017. The purpose of the guidelines is to adopt a consistent and convergent approach to solvency ii preparation across europe and to mitigate the risk that supervisors will adopt their own approaches at a national level.
Guidance solvency ii data quality management by insurers we have observed the following good practices with respect to drawing up and implementing data quality policy and data governance structures. The countdown to solvency ii is moving to a decisive stage. Solvency ii, the practical implications for asset managers. It is important to ensure that the data policy or expert judgement policy. Three major consultation papers cp 33, 43 and 60, crossreferencing each other, provide directives on data quality, especially for technical provisions, model designs and. The solvency ii directive requires that insurance and reinsurance. On 1 january 2016, the solvency ii regulatory regime came into force for insurers across the european union eu. The proposed method is simple, relies on publicly available data, and is consistent with the var approach underlying solvency ii. The amount of information to be reported under solvency ii is a significant increase. The solvency ii consolidated data the data included in accordance with method 1 does not include the entities that are included in the group solvency calculation in accordance with method 2 us life insurance entities, bermuda, japan, mexico and brazil.