In Europe and also in the United States, Solvency II is going to impact heavily on the level of financial information that insurers must report upon.
The new supervisory framework on solvency requirements for European insurers is expected to be issued shortly and will be implemented from 2012 onwards. Solvency II will set solvency requirements that match the risks run by insurers and that are based upon mark-to-market valuation principles.
Solvency II has created all sorts of challenges to regulators and insurance and reinsurance companies, and many companies have been waiting for the final information on the scheme before making sure they will be compliant by the time the framework is brought in.
That said, there may still be companies that have major decisions outstanding on the adequacy of their IT systems. Solvency II, no matter how the final version of the framework turns out, will inevitably mean the need for a more rigorous audit process.
Insurers and reinsurers will need systems that will be able to cope with these requirements, merge data on spreadsheets and produce their information in a way that is acceptable to the EU.
Some companies may have been able to manually process spreadsheets until now, but the advent of Solvency II will mean the need to produce many more reports and now may be the time for them to systemise this through the improved use of information technology.
There may also be increased data transit between Managing General Agents (MGAs) and the carrier, which will all need to be documented.
So, while we all wait and watch for the finer details of the Solvency II framework to emerge, there may still be time to consider improving your systems.
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