A lot of what Solvency II addresses is improving transparency across the firm, between the firm and its regulators, and with the customer. SAS recommends these six data quality process steps to support Solvency II initiatives.
Do you know how your data gets to your desktop each morning? Do you know where it comes from? The Solvency II directive has made the question of where and how very important to insurers and resurers across Europe.
Nicolas Michellod, Senior Analyst in Celent’s Insurance Practice, says that although insurers have been preparing for Solvency II for a couple of years, not all have made their decisions about a technology vendor that addresses the new regulatory framework.
No industry is immune to failure, and over the past few decades, there have been several examples of significant insurance company failure. Long before the financial crisis emerged in 2008, it had been recognized that existing risk management and solvency regulations were inadequate. Solvency II is probably the most ambitious financial services legislation ever implemented. It will completely change the measurement of the financial stability of European insurers.
Banks and their regulators struggle to agree on a level of regulation that provides a suitable operating framework for a successful and profitable business without endangering the economic well being of the state and its citizens. But is more regulation the way to move forward safely?
Basel III has garnered a great deal of attention lately – particularly the discussion on liquidity. For banks to be successful in meeting the evolving Basel III requirements they must use a holistic approach to managing risk and learn ways to use these systems to run their business.
Solvency II implementation costs may shave a few cents off earnings per share, but this cost should be balanced by the benefit of a far more transparent – consistently transparent – set of reporting requirements than before. This valuable information will lead to improved economic planning and insight, and the ability to embed early-warning mechanisms.
Credit risk classification systems have been in use for a long time, and with the advent of Basel II, those systems became the basis for banks’ capital adequacy calculations. What is needed going forward is an efficient and honest dialogue between regulators and investors on capitalization.
Part 2 in this series tackles the subject of ineffective regulation for the ‘too big to fail’ problem. Tara Skinner says that market forces should correct for a less-than-perfect regulatory environment while preventing banks from taking inappropriate risk-taking activities.
ORSA seems very similar to the process for calculating the regulatory financial buffer the ‘Solvency Capital Requirement’ but there are differences – Simon Kirby explains.