Insurers have about 18 months to deliver the capabilities necessary to meet the requirements within the prescribed deadlines, while complying with current reporting requirements. How prepared are you?
We are pleased to present the results of a survey undertaken by our European insurance entities to assess the extent of plans to meet Solvency II reporting requirements by the effective date of 2014.
The survey results indicate varying levels of progress in Pillar III, ranging from insurers that have yet to assemble a detailed gap analysis to those who are in the process of implementing reporting solutions that encompass the Quantitative Reporting Templates (QRTs).
Questions were posed to 53 insurers across the European region, including 14 life insurers, 21 non-life insurers and 18 composite insurers. The geographical distribution of the respondents covered the United Kingdom, France, Germany, Belgium, the Netherlands, Switzerland, Spain and Italy.
For those insurers who have completed an initial Pillar III gap analysis, the following considerations remain outstanding:
- Interpreting the yet-to-be finalized regulatory requirements to enable definition of suitably granular data requirements for the QRTs, as well as disclosures for Regular Supervisory Reporting (RSR) and the Solvency and Financial Condition Report (SFCR)
- Defining and implementing extensions to existing data models to capture the cross pillar data synergies driven by broader Solvency II reporting, (e.g., RSR and Own Risk and Solvency Assessment (ORSA) requirements around planning and capital disclosures)
- Developing and implementing a robust data governance policy, including documenting the end-to-end process and internal controls to ensure agreement on materiality, and completeness and accuracy of data (data quality) for both internal models and regulatory reporting
- Improving and redesigning reporting processes to meet Solvency II timelines, including remediation of reporting bottlenecks, and implementing of new internal controls
- Identifying and implementing Pillar III reporting solutions, incorporating internal reconciliations (e.g., to financial ledgers and management reporting) and extensible Business Reporting Language (XBRL) reporting requirements
- Considering the impact on business-as-usual reporting, including demand for scarce resources ( i.e., qualified staff and ownership of Solvency II reporting requirements)
- Implementing a cost-effective reporting strategy and designing a reporting architecture that can easily address incremental changes as external guidance is updated
For other insurers who are starting their Pillar III analysis, the considerations highlighted above provide insights into the breadth and depth of issues facing those who are more advanced in embedding the new reporting processes. In accordance with current Solvency II implementation timelines, Pillar III reporting will commence in Q1 2014.
Therefore, insurers have just over 18 months to deliver the capabilities necessary to meet the requirements within the prescribed deadlines, while also complying with current reporting requirements.
As such, Pillar III implementation projects need to be mobilized now to meet the demanding reporting challenge. Insurers do not have the luxury of waiting for requirements to be made final before seeking to understand their complexities and assemble responses.
See our respondents’ answers to gauge how prepared (or not) you are in comparison to other insurers.