The Solvency II directive enacted on Jan.1 has called on asset management firms to become more strict and transparent. This level of capital accuracy has impacted the entire European insurance sector. However, Solvency II may simply be the first push toward more regulations. For instance, with the directive now in place, reported data is used for supervision. Under the new EU regulatory regime, the European Insurance and Occupational Pensions Authority has shifted its focus to supervisor under development, which is a trend that will continue to make regulations more stringent in the near future.
“Solvency II calls for more transparency in data reporting.”
How Solvency II has shifted reporting focus for insurance companies
As Solvency II is in its first month of implementation, insurance companies in the EU are anticipating great changes in the near future. According to a recent RIMES survey “Solvency II: The Data Challenge,” 80 percent of insurance companies believe that data risk management, modeling and reporting will be among their most substantial investments in 2016. The consensus in the insurance sector is that there will be more data management, storage and processing required under Solvency II. According to a recent Waters Technology interview with Gabriel Bernadino, chairman of the European Insurance Occupational Pensions Authority, making these data management adjustments is one thing, but implementation is an entirely different journey.
“As of January 1, the first regulatory journey of EIOPA will be practically completed,” Bernadino stated. “But the new, more challenging supervisory journey will only begin. Good regulation is just a first step. The second step – and actually an even more crucial one – is its implementation.”
Navigating through Solvency II
Solvency II was intended to promote unified reporting across all EU countries for three reasons: ensure an equal playing ground for all insurance companies, reduce the potential for regulatory arbitrage and provide regulatory supervisors, investment managers and insurance companies with a more accurate depiction of risk exposure. However, the challenge is to find the data to be used for Solvency II reporting, which is often stored inefficiently. The onus is on investment managers to provide the data to insurance companies so that they can report back on it.
The question going forward for many insurance companies is whether their investment managers have all the necessary data for Solvency, and if it is in the required format.
The content provided in these articles is intended solely for general information purposes, and is provided with the understanding that the authors and publishers are not herein engaged in rendering regulatory or other professional advice or services. Consequently, any use of this information should be done only in consultation with qualified legal counsel. The information in these articles was posted with reasonable care and attention. However, it is possible that some information in these articles is incomplete, incorrect, or inapplicable to particular circumstances or conditions. We do not accept liability for direct or indirect losses resulting from using, relying or acting upon information in these articles.
- What Makes a Data Partnership Strategic?
- Full-Service Model: The Single-Platform Utopia That Can Leave You Wanting More
- Tap Managed Services to Solve and Scale for the ETF Data Challenge
- The FCA Highlights Importance of Robust Insider List Management
- ETFs and Transparency: Four Questions Institutional Investors Should Ask