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Insurance: preparing for Solvency II Pillar 3
 

Insurance: preparing for Solvency II Pillar 3

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This presentation covers the topics below, with a particular focus on the challenges and practicalities of implementation ...

This presentation covers the topics below, with a particular focus on the challenges and practicalities of implementation

• Solvency II reporting timelines and Pillar 3 requirements
• Key implementation challenges; European Survey
• Market Status and preparedness
• Developing your Pillar 3 solution

This presentation is taken from an EY webcast which is available on-demand. For more information visit: http://www.ey.com/GL/en/Issues/webcast_2014-10-04-1400_insurance-preparing-for-solvency-ii-pillar-iii

To access the EY European Solvency II survey 2014, visit: http://www.ey.com/GL/en/Industries/Financial-Services/Insurance/EY-european-solvency-ii-survey-2014

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    Insurance: preparing for Solvency II Pillar 3 Insurance: preparing for Solvency II Pillar 3 Presentation Transcript

    • Insurance: preparing for Solvency II Pillar 3 10 April 2014
    • Preparing for Solvency II Pillar IIIPage 2 ► This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ► The views expressed by the presenters are not necessarily those of EY. ► This presentation is © 2014 EYGM Limited. All Rights Reserved. EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more of the member firms, of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Disclaimer
    • Glossary of terms QRTs Quantitative Reporting Templates SII Solvency II SFCR Solvency and Financial Condition Report RSR Regular Supervisory Report MCR Minimum Capital Requirement SCR Solvency Capital Requirement OFR Operating and Financial Review SPVs Special Purpose Vehicles TBD To be determined EIOPA European Insurance and Occupational Pensions Authority MCBS Market Consistent Balance Sheet
    • Today’s moderator David Foster Ernst & Young LLP (UK) Partner Global Insurance Finance Change Co-Leader
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 5 Join today’s Twitter discussion: #EYInsurance
    • Today’s presenters Preparing for Solvency II Pillar IIIPage 6 Désiré Lan Ernst & Young Director Dr Monty Cachej Zurich Group Head of Solvency II PMO & Solution Management Christian Schmid Ernst & Young Senior Manager Kim Harmer Ernst & Young Director
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 7 Join today’s Twitter discussion: #EYInsurance
    • Pillar 3 requirements: What are the deadlines for reporting? Preparing for Solvency II Pillar IIIPage 8 End State (2019) Accelerated reporting 6 weeks14 weeks 6 weeks5 weeks 6 weeks8 weeks 6 weeks 2016 Full Implementation 22 weeks 6 weeks8 weeks 2015 Preparatory Phase 6 weeks20 weeks Feb Mar Apr May Jun JulJanYear of reporting Quarterly (Q3’15 only) Annual (y/e 2014) Quarterly Annual Quarterly Annual Annual Solo SFCR/RSR/QRTs Quarterly Solo QRTs Quarterly Group QRTs Annual Group SFCR/RSR/QRTs Key
    • Pillar 3 requirements and governance Preparing for Solvency II Pillar IIIPage 9 Impacted business functions ► Finance and Actuarial functions ► Company Secretarial ► Compliance ► Internal audit ► Asset management ► Investor relations ► Finance and Actuarial functions ► Asset management ► Investor relations ► Compliance ► Internal audit ► Company secretarial Potential Sources ► Directors’ report ► Company Registrar ► Internal MI reporting ► Financial statements ► Risk and Capital reporting ► Compliance reporting ► Financial statements ► Internal MI reporting ► Internal/Standard model capital reporting ► Internal/Standard model technical reporting ► Risk reporting ► Compliance reporting ► Business and performance ► System of governance ► Risk profile ► Valuation for solvency purposes ► Capital management Content A – Premiums, claims , exp B – Own funds, MCR, SCR C –Balance Sheet and variance analysis of own funds D – Assets E, F – Technical provisions J – Reinsurance G, IGT – Group items K – Activity by country Other – e.g., Duration of liabilities, Area RSR/ SFCR QRTs1 1 The materials issued with the preparatory guidelines introduce a new naming system for the templates that is less transparent than stated here so we have retained the ‘old’ names.
    • Preparatory phase – What is required to be submitted and when? Preparing for Solvency II Pillar IIIPage 10 QRT forms SII preparatory phase SII full implementation 31/12/2014 Q3 2015 Q1 2016 31/12/2016 Solo annual Groups annual Solo quarterly Groups quarterly Solo quarterly Groups quarterly Solo annual Groups annual Content of the submission 1 1 1 1 Narrative information subset subset   Basic information 1 1 1 1 1 1 1 1 Premiums, claims and expenses paid 1 1 1 1 Own Funds, MCR, SCR 13 11 3 1 3 2 13 11 Participations 1 SII Balance Sheet 2 1 1 1 1 1 3 3 Variance analysis of own funds 3 Assets 2 2 2 2 6 5 5 5 Non-life related forms 1 1 1 7 Life insurance related forms 1 1 1 6 1 Reinsurance including SPVs 3 1 6 3 Activity by country 1 Financial Stability information 2 2 2 2 Specific group templates 4 9 Total no of forms 21 20 10 6 19 13 49 36
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 11 Join today’s Twitter discussion: #EYInsurance
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 12 Join today’s Twitter discussion: #EYInsurance
    • Key implementation challenges ► Accelerated close process ► Data consistency ► Asset reporting ► IT Systems for reporting ► Extent and granularity of requirements ► Uncertainty ► Internal and external stakeholder management Preparing for Solvency II Pillar IIIPage 13
    • EY Solvency II European Survey Preparing for Solvency II Pillar IIIPage 14
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 15 Join today’s Twitter discussion: #EYInsurance
    • Market status and preparedness Based on EY assessment of some leading insurance companies in UK and Continental Europe Preparing for Solvency II Pillar IIIPage 16 Peer comparison Co 1 Co 2 Co 3 Co 4 Co 5 Co 6 Co 7 Co 8 1. Current status of Pillar 3 project and solution: ► Developed reporting processes? ► Designed Solution (IT & reporting architecture)? ► Built or ‘off the shelf’ reporting package installed? ► Any dry runs performed already? Yes No Partial Key
    • Market status and preparedness (cont’d) Based on EY assessment of some leading insurance companies in UK and Continental Europe Preparing for Solvency II Pillar IIIPage 17 Peer comparison Co 1 Co 2 Co 3 Co 4 Co 5 Co 6 Co 7 Co 8 2. Is a tactical solution or strategic solution (automated solution, data warehouse) being considered for the interim measures? Strategic Strategic Strategic Tactical Tactical Strategic Strategic TBD 3. Are there plans to deliver a full dry run before 2015 interim measures? TBD TBD 4. Is the reporting solution being built to deliver the interim measures, 2016 or the Target State timelines? (timelines get shorter over time) Target State Target State 2016 2016 TBD Target State 2016 TBD 5. What are the indicative/ estimated budgets to complete €2-3m €3-4m TBD TBD TBD TBD €1m TBD
    • Today’s agenda ► Introduction ► Solvency II reporting timelines and Pillar 3 requirements ► An industry practitioner’s perspective ► Key implementation challenges; European Survey ► Market status and preparedness ► Developing your Pillar 3 solution Preparing for Solvency II Pillar IIIPage 18 Join today’s Twitter discussion: #EYInsurance
    • 2014 2015 2016 Work-streams Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Programme Management Data Process – Tactical Solution Process – Strategic Solution Technology People & Org Assess impact on people and governance Developing your Pillar 3 solution: Typical implementation roadmap Preparing for Solvency II Pillar IIIPage 19 Solution design and implementation Data catalogue/governance 2014 QRTs (interim) Process design & dry runs Quarterly QRTs (interim)Process design & dry runs Process Gap/ Req’ts To be process (Target) Embed Annual QRTs and RSR Embed Quarterly QRTs in BAU Dry runs UAT Testing Align to be process with IT solution Process Gap/ Req’ts To be processes (Target) Go Live System Test Integration Design (inc. build or buy) Functional Requirements Roles, responsibilities, training (strategic) Roles, responsibilities, training (tactical) Readinessassessment Update gap assess- ment
    • Solution insights: Accelerating the reporting processes Preparing for Solvency II Pillar IIIPage 20 Some levers for change ► Data quality ► Technology enablers ► Process improvements
    • One-minute recap
    • Contact us David Foster Ernst & Young LLP (UK) Kim Harmer Ernst & Young Désiré Lan Ernst & Young Christian Schmid Ernst & Young Preparing for Solvency II Pillar IIIPage 22 +44 20 7951 5687 dfoster@uk.ey.com +44 20 7951 0556 kharmer@uk.ey.com +44 20 7783 0790 dlan@uk.ey.com +49 89 14331 24913 christian.schmid@de.ey.com Follow us on Twitter: @EY_Webcasts
    • Resources ► www.ey.com/insurance ► www.ey.com/solvencyII ► www.gfsi.ey.com Preparing for Solvency II Pillar IIIPage 23
    • Insurance: preparing for Solvency II Pillar III Thanks for participating Preparing for Solvency II Pillar IIIPage 24