To what extent will the Solvency II review change the framework and reporting requirements for undertakings? That's the question we're asking and answering, in our upcoming white paper. In the meantime, we're sharing excerpts from the paper, to give you a more general overview of the impact of the review.
Implemented in 2016, Solvency II is an EU directive of reporting requirements for insurance firms and groups, which was developed to harmonise insurance regulation and reporting across the EU.
With reporting requirements and taxonomies ever-evolving, reviews are required every few years to ensure reporting expectations and processes are as efficient as possible. A review in 2018 resulted in version 2.3.0 of the framework, and brought about a first batch of significant revisions; prior versions had been focused mainly on bug fixes.
Despite original expectations that this would be a major review of the Solvency II directive, the early signs are that the big plans for change originally touted by EIOPA have been watered down. And whilst EIOPA does have specific needs for data collection and reporting requirements, they have had to consider the current reality of the insurance market, and what it can and cannot handle in terms of reporting expectations.
This means that, instead of the significant changes many were expecting from this review, what we are seeing instead is a significant overhaul of the reporting centred around ‘more of the same’.
What are the changes for taxonomy 2.8?
In place of a revolutionary change, EIOPA has opted for an ongoing revision of requirements. Existing templates have been tweaked, for example, specific rows might have been added, or labels changed for other rows.
Another change, is the separation of certain single templates into multiple templates. Splitting these up is a more sensible way of presenting the data; yes, there are new templates to consider, but the data remains the same, essentially.
Are they mostly technical or business changes?
With changes being made to both the technical framework (XBRL Data Point Model) and the reporting templates, the changes introduced in EIOPA taxonomy 2.8 seem to be an even split of technical and business-oriented changes.
Most technical revisions aren’t expected to adversely impact the reporting workload; unlike business-oriented revisions. Reporting requirements are updated in response to market changes, and new reporting templates must be created to reflect the introduction of new insurance products - and subsequent risks - that have not existed or been reported on previously.
Will the changes make it easier for undertakings to comply?
Right now, the changes centre around the reporting templates: the creation of new ones and amendments to existing templates.
This means that, for most undertakings, the impact on their reporting process should be manageable. Tweaks to existing reporting templates are designed to address the blind spots and lack of information in the current reporting that have become apparent over time.
For Invoke clients using the FAS data module, the impact of the changes will be much reduced thanks to the automation it allows. Portal users will need to update their templates accordingly and prepare for the changes ahead of time.
Coming up... our new white paper
Invoke will be diving deeper into this subject, in our upcoming white paper. Check back to see when it's available and download your free copy for a more comprehensive look at the Solvency II review, and expert insights from our team.