The Solvency II bonus

Ecclesiastical Insurance reduced costs, improved decisions, established data governance processes

Solvency II is a risk-based capital adequacy regime for European insurers that stipulates that the data behind risk models and business decisions is subject to scrutiny and that, on examination, it should be "accurate, complete, appropriate and timely."

Ecclesiastical Insurance, one of the UK's largest British-owned insurers, has labeled Solvency II compliance as its No. 1 corporate project. Using SAS® Data Management, Ecclesiastical is implementing an organizationwide approach to data quality improvement, building a library of business rules and embedding a data quality framework. This will help to track errors to the source business process or system cause.

SAS has supported implementation of ongoing data-governance monitoring processes and reporting.

Ecclesiastical Insurance has a 125-year history of protecting churches, heritage buildings and other specialty risks in the charity, faith, care, education and property-owner sectors, in addition to personal lines of insurance.

Solvency II preparations within Ecclesiastical have been progressing for three years, and as such its understanding of Solvency II compliance is mature.

"Solvency II regulation requires a data quality improvement platform to be in place and to be embedded within our culture," explains Nigel Light, Business Intelligence Analyst with Ecclesiastical. "In essence, this will require a step change across our organisation."

Ecclesiastical's aim of providing evidence of robust data processes to the Financial Services Authority will assist in IMAP approval, permitting it to conduct risk assessments using its internal data models rather than the more prescriptive standard model. As a result, the Business Intelligence (BI) team at Ecclesiastical decided it was crucial to build internal data management that could support this. This would identify errors, omissions and any issues on a continual basis.

With the flexibility of the data management platform for both business rule design and execution, we have a solution that will not only assist with our compliance of the Solvency II directive, but also one that puts us at the forefront of the industry.

Nigel Light
Business Intelligence Analyst

Addressing data quality head on

"Our pilot area was UK General Insurance claims, where our aim was to monitor and improve the quality of data captured by the claims department," Light says. "An initial data profiling exercise, supported by conversations with both downstream data consumers and the claims department themselves, helped to identify existing data issues."Based on these findings, business rules were constructed within the design environment of the SAS solution, which, for example, enabled the insurer to automatically identify potentially duplicate claims and any invalid postcode data captured on the system. Other common errors addressed included inaccurate claim event dates and mismatches of cause codes when compared to the claims narratives entered by claims staff. Cases identified were flagged for manual investigation and resolution."

Establishing data governance processes

SAS allows Ecclesiastical's business rules to be run on both an individual claim and data set level. The results are stored in a secure repository and then written to an internally developed dashboard, used by the organization to monitor data quality performance metrics and case identification within a day of each entry being captured on the system.

A data steward, working within the business unit, oversees the dashboard to monitor levels of data quality and rectify issues on a continuous basis. These insights give local management the ability to work with the BI team to amend or adjust business rules and, over time, continually improve the data asset.

It also provides valuable evidence as to the effectiveness of the company's data governance approach, which can be provided to regulators. A trend indicator details the occurrence of each business trigger, which lets Ecclesiastical monitor the effectiveness of actions taken to rectify the root cause of any issue.

"We started small, with just a few simple rules," Light explains. "But the opportunities are huge, and we have already expanded our base to include our euro operation based in Ireland and our ANSVAR subsidiary too. With the flexibility of the SAS solution for both business rule design and execution, we have a solution that will not only ensure our compliance with the Solvency II directive, but that puts us in a strong position to provide better customer service and internally improve business operational practices."

In the next stage of the data governance program, Ecclesiastical plans to embed data quality into its corporate culture through a data quality framework, including an enterprisewide dashboard and a process to feed data issues into the internal workflow system.

Reduced costs and better decisions

Implementation of the SAS solution is a major step toward Solvency II compliance. Yet it has also led to a host of other business benefits, which the BI department believes will demonstrate the effectiveness of the program to the executive board in purely commercial terms.

More accurate and complete data should lead to a direct reduction in the cost of claims "leakage," that is, where avoidable costs for settling a claim have been incurred. By improving risk location data, there is an opportunity to reduce the cost of reinsurance purchase. Furthermore, by supplying more accurate and complete data that details the risks that Ecclesiastical covers, risk selection can be improved.

"There are, of course, some benefits which are more intangible and harder to quantify," Light explains. "But we believe these include better decision making, particularly in the areas of risk selection, forecasting, pricing and claims reserving due to data improvements on which decisions are based, as well as improved customer service and industry reputation through the use of more accurate data across our customer touch points."

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Challenge

Meet rigorous data requirements of Solvency II directive

Solution

SAS® Data Management

Benefits

Reduced costs, improved decisions, established data governance processes

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

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