Buy-side Awards 2016
After clearing the first hurdles of Solvency II reporting – day-one and first-quarterly submissions earlier this year – insurers now face a bigger obstacle: their first annual reporting in May 2017.
But the task does not end there. Many companies have been in high-intensity project mode to get initial reports done on time. Now companies have to transform their reporting into an efficient, business-as-usual process.
Insurers across 21 countries, including Zurich Insurance Group, Swiss Re and Médicis, used BearingPoint's Abacus/Solvency II platform to achieve their initial reporting to authorities such as the Prudential Regulation Authority in the UK, Autorité de contrôle prudentiel et de résolution in France and the Central Bank of Ireland.
"Overall, our clients' first submissions went smoothly. What caused most headaches was the fact that certain countries interpreted the specifications from the European Insurance and Occupational Pensions Authority (Eiopa) more strictly than others, which we have had to accommodate in our system," says Rüdiger Lambrecht, senior manager at BearingPoint, based in Frankfurt.
Regulators were also working to different timelines, with some providing their test environments later than others, and several opening them for a limited time only. "This reduced the time for conducting test submissions and added complexity to the testing process. Fortunately, we had anticipated this and factored it into our project and release plan. First test submissions were done as soon as the first regulators opened their environments, so we were able to identify any problems and mitigate them early in the process," says Lambrecht.
Insurers also face having to complete national specific templates (NSTs) in some countries in addition to Eiopa's standard quantitative reporting templates (QRTs). Some reporting system vendors have left firms to fend for themselves with these. But BearingPoint has extended its system to support the NSTs for Ireland and France – 13 in the case of Ireland and more than three times as many for France – and is planning to support other countries as they define their NSTs. Clients are already submitting Irish NSTs, but France's NSTs only come into effect for 2016 year-end reporting.
With the initial round of reports completed and annual reports in preparation, insurers are shifting their focus from simply getting the reports to the authorities on deadline and in the right format, to being able to do so in an efficient, business-as-usual process.
Many insurers have been struggling in project mode, with stories of staff working till 3am to get reports out. "Our software not only provides the ability to create the required XBRL (extensible business reporting language) output, but because we have our own data model we have the possibility to automate many of the processes along the way. This speeds up the preparation of reports and is easier to maintain," says Lambrecht.
Abacus/Solvency II can automate much of the data gathering and populating of the QRTs and NSTs. BearingPoint's data model enables it also to respond quickly to amendments in the regulatory requirements.
Having our own data model means we are more robust against changes by Eiopa. Whenever there is an amendment from Eiopa, such as reordering columns or regrouping information, we handle it in our software, so clients do not need to adjust their interfaces
Rüdiger Lambrecht, BearingPoint
"Having our own data model means we are more robust against changes by Eiopa. Whenever there is an amendment from Eiopa, such as reordering columns or regrouping information, we handle it in our software, so clients do not need to adjust their interfaces," Lambrecht says.
One client remarks that BearingPoint tracking changes in reporting taxonomies reduces the insurer's regulatory risk. Another says interpreting the rules is often a challenge: "We sometimes find it difficult to understand what the authorities are aiming at with their regulation, and here we have had great help from the BearingPoint software."
Abacus/Solvency II is available for on-premises installation or as software-as-a-service (SaaS).
Swedish insurer AFA Insurance says the rapid deployment available via SaaS, including the customisation of processes, was a key reason for choosing the product. BearingPoint has also recently reworked the status monitor in Abacus/Solvency II based on user feedback. Users can know exactly what processes are running at any point in time and if any are on hold or have issues.
It has also improved the auditability of the platform with functionality such as the recording of user activity and details of report sign-offs.
"Abacus/Solvency II uses the same technology and similar business content as our solution for insurance regulators. As a result, we have a detailed understanding about regulators' requirements and challenges with the collection of the QRTs," Lambrecht says.
As companies get their heads above water with their reporting processes, they are beginning to realise the data they are gathering and centralising along the way could have significant value. To help extract this, BearingPoint introduced a module for Abacus/Solvency II that allows analysis of report data, as well as the definition, measurement and visualisation of key performance indicators for management reporting.
A senior manager at a Scandinavian insurer that plans to use the module says: "The information we are having to submit under Solvency II is much more structured and detailed than we have at present, so being able to analyse this data in the BearingPoint application will be a natural next step for us."