Many insurance firms will need to prepare vigorously to ensure that they are ready to meet the Solvency II requirements.
To comply with the regulatory regime, insurers will need to produce various reports in short periods of time, according to Insurance Risk. Starting on Jan. 1, 2016, affected firms will need to generate a solvency and financial condition report every year.
In addition, they will be required to create a complete quantitative reporting template both every quarter and every year, the media outlet reported. They will need to generate a regular supervisory report three times per year.
Insurers will also face substantial scrutiny of their data and how it is used to generate reports, according to the news source. In a nutshell, affected firms should be prepared for a government regulator to pick out any data cell in a submission and then trace its lineage through every step of the reporting process.
Buy-side firms face numerous pressures
The industry participants will need to get ready to clear these myriad hurdles at the same time that they are coping with other pressures. Many insurers are struggling to overcome rising expenses and also navigate the current regulatory environment.
Buy-side firms are coping with rising cost pressures due to client demands on their use of benchmarks. Companies that manage assets harness benchmarks to evaluate their performance.
While this situation may sound simple enough, clients can demand that institutions harness benchmarks that are either sophisticated or customized. Leveraging these particular resources can be expensive.
Some insurers will need to overcome a more basic problem if they want to successfully comply with Solvency II, and that is one of organization, according to Insurance Risk. These industry participants could potentially face many different data management challenges, since their key information could be stored using a wide range of setups and systems.
For example, insurers might rely on legacy systems to retain their crucial data, the media outlet reported. These buy-side firms have traditionally harnessed these particular systems to hold this information, as well as end-user computing technology assets frequently consisting of Microsoft Access documents and Microsoft Excel spreadsheets.
To centralize or not to centralize
When getting organized, insurers need to consider some data storage matters. More specifically, they need to figure out if they are going to hold their information in one central database or instead use a different method, according to the news source. It is important to note that there are costs and benefits associated with any of these moves.
Companies must keep in mind that if they store all their data in one place, the individual users could potentially pull it into their databases and then transform it. In these conditions, firms might benefit from making a strong effort to focus on data lineage. Doing so will give them an in-depth history of exactly what happens with their important information.
Knowing the precise path that this data takes after leaving a central warehouse or source will be crucial for firms so they can be ready for regulator scrutiny, the media outlet reported.