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Asta is one of the largest managing agents in the Lloyd’s market, and like its industry peers has faced a number of challenges getting ready for Solvency II Pillar 3 compliance before the 1st January 2016 deadline.

The company chose Invoke software to automate its end submissions process. Matt Lane, Head of Business Intelligence and Pillar 3 project manager at Asta, explains why.

  • Insurance
  • Insurance regulatory reporting
  • Solvency II CMR Reporting
Invoke’s software was one of the few that could handle both Lloyd’s and EIOPA's Solvency II requirements. Its ability to streamline the process convinced Asta to go with the Invoke package.
Matt Lane
Head of BI & Solvency II Project Manager

Background

Solvency II is the biggest overhaul of insurance regulation in recent times. Globally, insurers are facing the challenge of bringing systems up to speed to adhere to the new harmonised EU-wide risk-based regulation framework which comes into force on 1st January 2016.

As one of the biggest managing agents in the Lloyd’s market, representing seven syndicates and over £700m if underwriting capacity, Asta is responsible for ensuring that Solvency II regulations are complied with for all its syndicates, which include single-line UK-focused insurers and multi-line insurers active in multiple jurisdictions.

The Reporting Challenge

Solvency II Pillar 3 reporting and disclosure has been one of the key areas of focus for Asta this year. Matt Lane, Head of Business Intelligence at Asta, says getting the company’s systems ready for the Solvency II deadline has been a complex and time-consuming task. Asta was looking for a pragmatic solution to meet the reporting challenge, one which could improve the efficiency of the process and cut down on the time needed to produce the final submissions. One of the main problems was finding something that could reconcile both Lloyd’s market requirements and those set out by the European Insurance and Occupational Pensions Authority (Eiopa) for Solvency II.

“Asta has to reconcile both the Lloyd’s and Eiopa submissions, each of which takes a different slant on things,” says Lane. “Lloyd’s submissions are more difficult to prepare in some ways than those of Eiopa, as Lloyd's Managing Agents have less time to complete the forms. In some cases Asta faces additional requirements for the Lloyd’s market. For example, Lloyd’s reports are required to be in CSV format as opposed to the XBRL format mandated by Eiopa for Solvency II. The structure of Lloyd’s forms is also different.”

With seven syndicates to draw information from, this puts extra demands on the reporting process. Each syndicate has its own systems, procedures, writes its own classes of business and has its own currencies. Within syndicates, Asta has also to reconcile data from different departments to present in the end-reporting stage.

“Now you have to create a single process with no departmental silos,” says Lane. “Where there is a need to have a department managing the process you need it to be aligned with other departments. It’s a process based on the end goal of reporting everything. Then that is automated to the nth degree.”

A perfect fit: finding a square peg for a square hole

Lane says that two years ago the company was still in the process of deciding how to approach the end-submissions process. Up to then it was thought it would be done via Excel. After he joined, Asta developed its own partially automated reporting system to handle the Solvency II submissions but was also looking at external software to help further improve the process. The problem was that few vendors he spoke to were able demonstrate they could deal with the Solvency II reporting requirements and Lloyd’s own reporting protocols.

“The business infrastructure process is very complex,” says Lane. “I had many sales meetings with vendors who were asked to show us they could meet the ‘Lloydisms.’ But none really demonstrated this except Invoke.”

Invoke was one of the few companies which effectively showed its ability to deal with both Lloyd’s and Solvency II EIOPA's requirements, offering low lead times for configuring its software to make it a perfect fit with the Lloyd’s system specifications.

“It is a different type of reporting software for the market— the Invoke space is new,” explains Lane. “There are a number of Pillar 3 reporting software packages in XBRL but none of them have an understanding of the Lloyd’s marketplace. Invoke did what we wanted quickly and using a flexible configuration approach that requires no hard-coding or major re-building should reporting requirements change. The Invoke team managed to perfectly align their software to make it fit both Asta’s internal requirements and the Lloyd’s CMR system.”

Invoke did a parallel run on the software for the April submission to Lloyd’s and was able to automate the reporting requiring just 12 days of Asta’s time.

Timing of the essence

Under Solvency II, time has become a more critical factor in the reporting process than ever. Where previously companies had some leeway to collate data using a manual process from multiple syndicates, managing agents will now have to present reports on a quarterly basis, increasing the pressure to meet deadlines.

“Under the current Lloyd's reporting timetable, you have months after the period end,” says Lane. “Now you don’t have months you have weeks. So business-as-usual now means that we are now having to do far more far quicker, and on a more granular level. Not forgetting that we also have to reconcile Eiopa and Lloyd’s presentations.”

Asta was persuaded to adopt Invoke’s reporting software once it became convinced about its efficacy in streamlining processes and cutting down on the time to produce the final reports. Using the Invoke software has cut down on the time to deliver the reports and increased the frequency of reporting and the volume of data the company can handle. The software has validation rules configured into it, including intra-document validations, cross report validations, dashboard on the validations, which should help the company avoid having to upload returns many times on the Lloyd’s CMR platform. The data provided to Lloyd’s by Asta and all the other syndicates and managing agents is ultimately aggregated and reported as a single Pillar 3 submission in XBRL format by the Corporation of Lloyd’s to the PRA on behalf of the entire London market using the Invoke e-Filing Insurance platform.

Future requirements

The next few years are likely to be challenging for most involved with Solvency II data reporting. Companies will have to adapt their business processes to the changing environment, with the possibility of new taxonomies and formats adding new layers of complication to the process. Having robust software that can deal with these issues is crucial, says Lane. More immediately, Asta is facing a busy six months before the Solvency II rules come into force next year. Firstly, Eiopa has its quarterly interim reporting test in the third quarter, due in to Lloyd’s in November. At the same time Lloyd’s is doing a Solvency II dry run for the first time in September. Getting the reporting system fine-tuned for these two tasks is imperative and will serve it well for the future.