On December 19, 2014 the Prudential Reporting Authority (PRA) published an update letter from the PRA’s Insurance Directors for all Solvency II-affected firms. The implementation date for Solvency II is set for January 2016. Insurers can now actively resume their efforts to become compliant with this long awaited regulation.
Solvency II is aimed to establish a revised set of market consistent, EU-wide capital requirements and risk management standards for the insurance industry. The new regulatory regime is designed to increase policyholder protection and reduce the possibility of consumer loss or disruption by requiring insurers to hold enough capital to absorb significant losses.
Impact on Business Models
The European Insurance and Occupational Pensions Authority (EIOPA) requires insurers to report asset data in a series of pre-defined template. Even though Solvency II is a regulation of insurance companies, service providers of insurance assets will also be impacted such as fund administrators, asset managers and banks. These pressures will threaten some life insurance and reinsurance business models as well.
Soften the Blow with Traceability and Automation
A key requirement of Solvency II is that insurance companies will be expected to show that the data received from administrators and data vendors is complete, accurate and appropriate.
Solvency II will not only change the rules that govern insurers, the regulations will transform their technology requirements. For many insurance firms, having the right technology in place will be vital to achieving compliance. There is a need for solutions that support multiple data reconciliation criteria and reporting tools that allow you to produce quick and flexible data analysis.
With this in mind, the clock is ticking. New regulations, new year…new rules. Addressing and automating Solvency II compliance should be a New Year’s resolution for all insurance companies.
By Grazia Cafagna, from: http://www.tagetik.com/blog/authors/grazia-cafagna/2015-01-13-solvency-ii#.VLz8oNLF98E