The Search for Solvency II Solutions

Accounting Standards

TPAs are also hoping that the European Insurance and Occupational Pensions Authority (EIOPA), which is responsible for Solvency II, will bring its reporting requirements in line with the International Financial Reporting Standards (IFRS).

"There are a couple of instances where Solvency II requirements are at odds with IFRS. One of these is gains and losses," says Lawrence. "Most people who are involved in providing data are looking to do this on an IFRS basis because that is what everyone reports on and what their systems are built around. To try to re-engineer wholesale primary accounting systems to work on any other basis would be extremely expensive, both for us and for insurers. If EIOPA does not change its policy on this, it would make reconciliation of reports being issued in respect of Solvency II and the annual financial statements of the company totally impossible."

Solvency II puts a great emphasis on the accuracy, completeness and appropriateness of data, and a big part of the challenge for TPAs is ensuring they achieve the required levels of data quality and that they are able to demonstrate this to their insurance clients.

Governance Challenge

Lawrence says his firm's Solvency II project has involved a lot of work on data governance. State Street has ring-fenced its Solvency II data set and has assigned an owner to each data item within the set. The identity of the owner has been documented in a Solvency II data directory, along with information about where the data was sourced from, what systems it goes into and what controls are in place as it flows through the systems.