A majority of insurers (57%) reported a significant dependence on third-parties for risk modelling and other critical data requirements in preparing for the Solvency II directive’s requirements, a recent survey by BNP Paribas Securities Services and InteDelta has found.
The sample consisted of 20 insurers from across the UK, the Netherlands, Germany, Switzerland and France. Respondents include large (50%), medium (25%) and small (25%) groups.
Adopting dedicated data work streams within their overall Solvency II programmes will build a clear view of critical external dependencies for data sourcing and risk reporting, the research revealed. Another key finding of the survey is that fund managers play a key role in insurers’ capacities to be Solvency II compliant. 80% of insurers identified affiliated and third-party fund managers as key data dependencies. There are also increasing requirements for risk modelling and securities services providers, said BNP Paribas.
While European insurers have made progress in terms of preparing for the Solvency II directive’s quantitative requirements and have started addressing risk governance, a majority (60%) were yet to address the directive’s disclosure requirements around public and regulatory reporting, according to the survey.
The survey found that while progress has been made by insurers in addressing the quantative and risk governance issues associated with Pillars I and II, respectively, significant work remains to implement and embed those requirements into their businesses. The disclosure requirements around reporting, the third pillar, were also anticipated to continue to develop.
Commenting on the research, Maxime Gibault, head of insurance companies at BNP Paribas Securities Services said the insurance industry must now urgently address the directive’s risk management and reporting requirements.
“What is clear is that insurers must re-engage with their asset managers over Solvency II in order to be compliant by Jan. 1 2014,” she added.
(JDC)