Solvency II is here. While it has been widely reported that insurance companies and asset management firms have dealt with the pressures of stricter data governance, it can be said that these changes are universally regarded as positive. The question many asset managers are asking, though, is the balance between regulatory compliance and client expectations: How do firms deal with Solvency II’s data quality demands while maintaining the high standards of their clients?
Implementing sound data management practices
Certainly there are challenges that have come into play following compliance with Solvency II regulations. Asset managers are now required to deliver complex asset and reference data in consistent formats, all in a much quicker turnaround time than previous years. In order to deliver the right depth of data at the right time, the underlying foundation of an asset manager’s data management process needs to be solid.
This is where look-through processes need to be more transparent and expansive in order to highlight anomalies in asset manager data. For example, these look-throughs could identify issues with having multiple holdings in the same stock that were bought with different valuations at separate times.
It is necessary for these data irregularities to be spotted, validated and examined so that the data can be re-aggregated. In order to implement this systematic level of data governance to identify these issues, processes and workflows need to structured so that users can examine, escalate and/or address these anomalies with a consistent approach. This level of data control enables asset managers to provide assurance to their insurance company clients.
Why these changes are good
For starters, this level of data control enables asset managers to provide assurance to their insurance company clients. With transparent, reliable and consistent data governance systems, asset managers can ensure accurate and validated regulatory reporting to meet Solvency II requirements, while instilling confidence in their insurance clients.
So from here, now entering into the fourth month of implementation, it seems that the asset managers that master control over their data workflows and processes will become favorites in the insurance sector. Those firms that can execute broader data management approaches and deliver stronger foundations necessary under Solvency II will be more equipped to respond quicker and more easily to clients and regulatory requirements.
There is much debate over the best data quality management platforms used by asset managers. But those that have the tools to identify and resolve key issues in data governance will be better prepared to manage ongoing client requirements as well as future regulations.