Chief Information Officer
Turning Solvency II regulations into strategy
UNIQA finds opportunity to industrialize data governance, support management’s decisions
In the Q&A below, UNIQA’s Emanuela Saccon, Risk Manager, and Sergio Miedico, Chief Information Officer, discuss the company’s path to Solvency II compliance and the additional benefits it’s reaped.
The criterion that guided us to select SAS was the need to adopt a solution that would be capable of optimizing the governance of all data in the company, not just the data related to the issues of Solvency II.
Q: How is UNIQA launching the Solvency II adaptation process?
Saccon: The adaptation activities are underway, and they accelerated following the development of the regulatory framework in terms of timing and processes. In the initial phase, we focused our efforts on the issues of the first pillar, relating to the calculation of the capital requirement. We then addressed issues related to governance and reporting.
Q: What are the areas of greatest commitment?
Saccon: One of the key themes of the Solvency II legislation is data governance. This is a crucial requirement because it affects the activities of all three pillars in the Solvency II Directive. The calculation of the capital requirement assumes accurate and timely input data to produce reliable results and to define the risk profile on the basis of which management can develop strategies with certainty in terms of investment or new products.
To achieve this goal, we had to integrate and standardize a range of heterogeneous information flows that are not only generated by different areas of the business but also come from various companies in the UNIQA group. UNIQA made a major investment to ensure the consistency and traceability of data and the completeness of the information required by Pillar III.
Q: On closer inspection, the traceability requirement, by its very nature, imposes a cross-sectional view. What does this mean to UNIQA?
Miedico: In a nutshell, Solvency II requires that all processes be tracked, documented and formalized. In technological terms, this means collecting, assessing, streamlining, standardizing and industrializing an abundance of information flows produced by the four companies of the group. This is done with the aim of designing a single, coherent and controllable flow.
Q: Was this the biggest problem you faced?
Miedico: Undoubtedly, one of the critical factors was the need to build a common language and a shared data dictionary - supplied by sources located in different areas of the company - in various places and often in multiple formats. On this front, however, we didn't start from scratch. Before the issues of Solvency II came to our attention, we had already embarked on a path of data consolidation and rationalization that resulted in the creation of a commercial data warehouse intended to monitor our business processes. Onto this existing core, we grafted the Solvency II adaptation activities, from the integration of legacy systems to data certification, and from governance processes to data presentation for reporting.
Q: And in terms of risk management?
Saccon: On the one hand, the plurality of information sources made it extremely complicated to map all the necessary information and organize it into a single flow. However, not all of the data was available in the management systems; some of it was the result of queries or came from manual processing or tables generated by spreadsheets. On the other hand, the standardization and consolidation processes were generally performed manually - an obvious waste of time and resources - and had an increased probability of error. We needed a technology-based solution that could replace these manual steps with automated tools to ensure data quality and process traceability.
Q: What value did SAS® provide?
Miedico: I must say that choosing SAS, in close collaboration with the risk management division, proved very rewarding. The criterion that guided us was the need to adopt a solution that would be capable of optimizing the governance of all data in the company, not just the data related to the issues of Solvency II. That said, after a careful analysis of the market, our preference was SAS because of the flexibility of its solutions, particularly the capability not only to ensure Solvency II compliance in terms of certification and traceability, but also to industrialize the processes involved in integrating legacy systems into the data warehouse.
Q: The concept of ‘industrialization’ seems to be a major theme in UNIQA’s journey to compliance. Can you elaborate?
Miedico: Going beyond the obligations and compliance requirements, Solvency II offered an opportunity to streamline and automate a set of operations that are extremely costly in terms of time and labor resources, from loadings to reconciliations, and re-checks to settlements. The industrialization of information processes accelerates the processing time, allows continuous monitoring of risk parameters, improves the timeliness and frequency of queries, and increases the granularity of the analyses. This is ideal for the decision-making process.
Saccon: In today’s world - where capital is a scarce resource and market conditions change very rapidly - management must be able to base its decisions on certified and reliable information that becomes available as soon as possible. What we're trying to accomplish with SAS, beyond compliance with regulations, is an executive dashboard that has the appropriate KPIs to support management in making investment decisions and defining product offerings. It achieves governance optimization and legislative compliance, and it ensures the accuracy and timeliness of the information underlying our decisions.
Q: Pillar II, in particular the Own Risk and Solvency Assessment report, presupposes the creation of a framework capable of supporting strategic decisions with future projections. What does this mean to UNIQA?
Saccon: The long-term vision and the ability to understand "emerging risks" are crucial to defining the strategy. The business plan must be enriched with new metrics and consider both possible adverse scenarios in achieving the objectives and also the resources available to address them. From this point of view, Pillar II marks a turning point, because it moves the emphasis to the need for a holistic and integrated risk profile obtained through the contributions of all divisions of the company (e.g., a future projection of capital and risk factors).
Q: So this integrated view of risk not only deals with risk management?
Saccon: It seems to me that one of the great innovations of Solvency II is that it strongly links numerous business areas, from actuarial services to IT, up to planning and control. In this sense, risk management becomes a transverse role, a kind of network that stimulates all business areas to advance toward a shared goal.
- Meet Solvency II compliance requirements while industrializing data governance and supporting management’s strategic decisions.
- Reduce error-prone, manual processes for collecting data across disparate sources.
- Achieve Solvency II compliance.
- Better understand emerging risks.
- Support management in making investment decisions and defining product offerings.
- Proactively monitor data quality metrics.
UNIQA is a European insurance group of Austrian origin which, with its four companies - Insurance, Protection, Pensions and Life - is active in all segments of the life and non-life insurance markets, from health care to savings, complementary pension funds to car insurance, family insurance to professional insurance.