Every day, senior executives in the insurance industry must make complex, business-critical decisions that take into account a wide array of performance metrics and market intelligence. Facing rigorous regulation and complex information-rich value chains, insurance companies have an absolute need for detailed, granular knowledge of what is happening in their operations, together with an ability to analyze this information in real time to investigate specific events, emerging trends and future what-if scenarios.
In many cases, the difficulty of achieving world-class business intelligence (BI) in insurance is compounded by insurers’ legacy information assets. At the same time, ongoing change in consumers, competition and capabilities means insurance businesses face growing pressure to break down their traditional, rigid information silos. According to industry research on information management in Europe and North America, 75 percent of CIOs plan to have a full enterprise-wide information management strategy in place within three years while nearly 60 percent see BI as core to competitive differentiation.
The Solvency II Directive is due to be implemented on 1 December 2013. The Solvency II Directive will apply to all insurance and reinsurance firms with gross premium income exceeding €5 million or gross technical provisions in excess of €25 million. Good Regulatory Compliance processes in an organisation will include a number of steps:
- Data gathering will deliver all required inputs to the compliance process.
- Data verification ensures the data is complete and „fit for purpose‟.
- Data processing will turn data into information, applying relevant business rules and performing risk calculations as set out by internal requirements, regulatory bodies and market obligations.
- The outputs will normally be reconciled back to the input data thus verifying the completeness of the process and providing transparency.
- Finally the outputs will be reported to internal and external stakeholders and market participants.
Recent turmoil in the financial markets has contributed to increased regulatory pressure on the Insurance industry. Therefore Regulatory Compliance is gaining an even higher priority for the sector and firm‟s level and timelines of compliance will, in the long run, impact its market position and reputation.
Ability to quickly assess and report on the firm‟s assets, liabilities, risk areas or Key Performance Indicators will determine its level of adherence to the rules imposed by the market regulatory bodies and efficient and well-integrated information processing, reporting and Business Intelligence systems will always lie at the heart of this process.
Data processing and integration is only the first step in the compliance route. The next steps will involve flexible testing mechanisms (in respect to data quality, processes and regulatory rules), scenario simulations and stress testing. We offer advice in all of these areas:
- Our Risk Test Framework provides a reliable testing framework which can be applied to any Risk Management solution including vendor-specific and in-house systems.
- Our Scenario Generator is an easily-configurable test case tool empowering the user to create even the most sophisticated tests, specifically tailored to the Insurance industry.
- Our Stress Testing Tool can simulate a range of business conditions and economic factors which can affect the market position of actuarial entities both large and small.
Solvency II: The capital adequacy regime for the European insurance industry known as Solvency II provides the industry with a sound set of regulatory rules creating a level playing field for all stakeholders in the sector. Solvency II will have a key role to play in the coming years and given the current implementation schedule will be an ambitious project for even the most seasoned risk managers.
The implementation of the quantitative aspect of the new directive (Pillar 1) becomes the most imminent task and ExistBI is uniquely positioned to offer software and consulting services in this area. Our knowledge of the regulatory landscape, coupled with large-scale risk solutions and Pillar 1 and reporting systems expertise makes us a leader in the field.
We couple excellent understanding of the risk management processing and regulatory requirements with complex financial modeling skills and excellent technology support. We can offer assistance with green-field projects as well as a range of dedicated tools to facilitate enhancement and testing of existing Solvency II calculation systems (both standardized and models-based).
ExistBI supports the whole lifecycle – from data gathering, build, functional and UAT testing and reports generation.