Achieve Solvency II compliance at less cost and in dramatically less time

European insurers of all types and sizes – as well as North American insurers who do business in Europe – have realized that compliance with Solvency II directives will require a substantial effort that will continue into the foreseeable future. The EIOPA Report on the fifth Quantitative Impact Study (QIS5) for Solvency II noted in Section 10.1 Practicability and Preparedness that “other areas that were commented on in almost all cases were improvements to data quality or data management and, sometimes linked to the latter, changes to IT.” Similarly, in a survey of insurance firms subject to Solvency II compliance, the UK Financial Services Authority’s IMAP thematic review of current efforts to comply found that data management appeared to be one area where insurance firms still have comparatively more to do to achieve the likely Solvency II requirements.

These surveys found five key data management topics that insurers needed to better address to be adequately prepared for Solvency II compliance:

  • Support a data framework by a comprehensive data policy covering data quality and data updates, approved by senior management.
  • Invest in a data warehouse as a way of addressing the various data management requirements, ensuring that the data can be used in destination systems in a meaningful way.
  • Create a data dictionary as an approach to understanding and classifying data, with procedures to ensure timely maintenance and consistent use of the data dictionary across the firm.
  • Ensure data quality so that data used in the standard model and the internal model is accurate, complete and appropriate.
  • Ensure that spreadsheets outside the control of IT would be subject to the same controls as formal IT systems to reduce risk.

The Magnitude for Solvency II solution leverages the modeling and data investments that you already have in place and minimizes the disruption to existing business processes and systems. Initial deployment is normally completed within days, while customisation of the information model to meet the needs of a specific risk profile is a project of weeks. Mapping and loading data from existing operational systems go on in parallel.

The Magnitude solution is driven by the needs of the business, and is designed to grow as your business grows; with a robust, model-driven information engine you can support the business beyond your immediate Solvency II requirements.

Solution Architecture

Our approach contains a pre-built insurance and Solvency II business model template ready for calculating SCR. The product creates and maintains a data warehouse and also includes a master data management capability so that you can deliver accurate and consistent data from a variety of source systems. Additionally, the Magnitude Dynamic Information Warehouse (DIW) automatically creates BI metadata for leading BI tools including IBM Cognos, SAP Business Objects, Microsoft Analysis Services, Microsoft Excel and Qlik that you can use to produce market disclosure and internal reports.

Solvency II impact on your information infrastructure

The new requirements will have a profound impact on the information strategy of many insurance companies, intersecting operational applications, data management, data governance, data integration, business intelligence and analytics capabilities. Moreover, IT departments need to integrate data from customer facing, operational, finance, risk and line of business systems into one consolidated, enterprise-risk repository so that the Solvency Capital Reserve SCR can be calculated. The Solvency II repository must include data
on:

  • Clients
  • Policies
  • Claims
  • Reserves
  • Risk
  • Underwriting
  • Reinsurance

Many insurance firms plan to use Solvency II as the impetus to build a lasting analytics and business intelligence infrastructure. The Magnitude for Solvency II solution addresses the immediate data management issues of Solvency II and can easily evolve into a broader data warehouse to address additional business requirements across many different lines of business (P&C, Life, Specialty, etc.) or functional areas (actuarial, underwriting, broker management, etc.)

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