Insurers and Solvency II: the challenge of a robust 'look through' practice
1 January 2016 marked the beginning of the most complex period ever faced by insurance companies regulated by the European Insurance and Occupational Pensions Authority (EIOPA).
While the application of Solvency II may not completely revolutionise their organisation, it does add a series of new constraints that will further complicate their activities.
Overall the situation is becoming increasingly complex for insurers, and navigating stormy waters will no doubt require adjustments in terms of resources and strategy.
One major challenge for insurance companies in the Solvency II era is the management of transparency – especially in view of the relationship with their external asset managers.
Insurers need to understand the investment operations of their external asset managers, hence to understand the true collateral sitting behind the funds. Operations may have an impact in terms of Solvency Capital Requirements (SCR) so it is clearly a key area where insurers need to focus first on understanding it clearly.
Increased transparency requirements do also provide better risk monitoring as well as in helping to know the exposure for a country or an issuer. It is therefore key for insurers to develop a robust ‘look through’ practice, including the reporting for holdings.
In this interview, published with Clear Path Analysis, our insurance and risk management experts discuss this ‘look through’ practice in detail, and ask whether outsourcing it is a guarantee to getting uniformed data which is comparable and easy to aggregate in their internal systems.
Download the full report by Clear Path Analysis (in English only), "Insurance Asset Management, Europe 2016"