Solvency II one year on: what are the main remaining challenges today with regards to Solvency II reporting? Antoine Bourdais, Director of Banking and Insurance, looks back on Invoke's experience of Pillar 3 reporting implementation, and develops his approach to upcoming challenges.
With Solvency II in place for a year now, are there any challenges remaining?
The main challenge post-Solvency II implementation is around data quality. Insurance regulators have insisted on a position of zero tolerance in terms of accuracy and timeliness of data.
In the coming months insurers will have to submit annual regulatory reports for the first time. This is a big increase in workload and requires an industrialisation of the Solvency II reporting process. Insurers that are currently using tactical solutions will have to move to a more strategic approach to meet the increased reporting burden.
At the same time, a number of countries have mandated additional reporting obligations — the so-called National Specific Templates (NSTs) — in addition to the European reporting framework. Insurers will have to integrate local reporting into the global reporting approach and face the prospect of taking new people on board to meet this challenge.
The third issue is the demand to produce narrative reports as well as quantitative ones while ensuring data integrity. Insurers must be able to re-use data to feed both regulatory narrative reporting (RSR) and publicly disclosed narrative reporting (SFCR).
Some insurers have made ‘tactical’ investments to meet data requirements. What are the benefits of a ‘strategic’ solution?
The benefit of the strategic solution is that you can reuse data, which drastically improves the overall data quality. At the group level, moving to a strategic solution helps to break the silos, both in terms of organisation of resources and with regard to data storage and reusability (for consolidated accounts and Solvency II reporting for example).
At the branch level, having a strategic solution allows linkage between annual accounts, domestic regulatory reporting and Solvency II branch-level reporting. The idea is to harmonise data flows between accounting and regulatory reporting teams and allow teams to share the same source data.
Insurers need to have a single flow of data. And this is only possible if the reporting system can store the same data once, in a centralised way, in the IT system.
How can insurers ‘future-proof’ their data solutions?
The key when designing a data solution is to understand that the data production constraints should not have any impact on how data is organised or collected in the system.
A reporting solution is future-proof if it is able to source information from the various IT systems, collect each piece of information once only, and store it in a generic data model. This data can then be transformed into the secondary data models, according to the various reports that have to be produced — from Solvency II to in-house data reporting.
How has client feedback helped evolve your solution?
The feedback of our clients has always been a key input for Invoke when designing our tax, financial and regulatory reporting solutions.
Our large client base in 32 countries provides us with strong feedback on the best practices to implement in our solutions. This has allowed us to understand how they work and to implement our premium standard offering solutions that are virtually plug-and-play with complete pre-defined configuration.
The premium configuration allows any new Invoke client to be up and running very quickly while still giving the possibility to enhance and customise standard features.
Much of insurers’ work on data has been driven by regulations. How are you helping make that data useful for business decisions?
In addition to the standard dashboards provided in the premium configuration, Invoke’s internal reporting capability helps our clients to make the regulatory data useful for business decisions. The fact that we have this unique data modelling capability, coupled with a spreadsheet application as end-user report generator, allows the business to leverage the value of data that has already been validated by regulatory teams and to design reliable customised reports based on this data.
Previously, the Invoke tool was an end-of-chain solution for reporting production. Now it has become the data centralisation system, the main data source. Reporting is just one of the features of the application.