How are insurers doing in their preparation for Solvency II?
They aren’t ready yet but there’s still some time to go. Having said that, many of the insurers we are working with are well advanced in their Solvency II preparations. Insurers appear (sensibly) to be taking a stepwise approach to Solvency II
- Step 1: Appoint a programme manager and plan the project.
- Step 2: Focus on Pillar 1 and the data and processes for calculating capital requirement.
- Step 3: Focus on Pillar 2 and the ERM and ORSA requirements
- Step 4: Focus on the reporting requirements of Pillar 3.
Each step requires different skill sets, and we can track the progress insurers are making by looking at who they are recruiting. Step 1 needs program managers, Step 2 actuaries and steps 3 and 4 require risk management skills. What we are seeing right now is that, as insurers complete step 2 (or at least have it under control) they are starting to look at Step 3 and are looking for risk management expertise. In particular, this expertise is needed to decide how to approach the ERM requirements of Solvency II.
In our experience, the larger insurers see Step 3 as an opportunity to embed risk management throughout the organisation and are using products like Sword as a foundation for this. Smaller insurers don’t necessarily have the resources in house for this but vendors such as ourselves are starting to make it easier by introducing solutions that include a pre-configured ERM framework for Solvency II, and pre-populated risk and control libraries.
Mike MacDonagh
Tags: ERM/ GRC, Solvency II
May 12th, 2010 at 6:44 am
Dear Mike,
before every step you spoke about, there is the foundamental theme of Data quality and Data process. Every actions will be based on data quality and this is an important focus of differencies with banks, because banks and Basilea II, because banks data environments had transactional data as primary data source, we don’t have it. I think we need data process culture revolution and not only on on IT level.
Best Regards,
Paola