The impact of spreadsheets on Solvency II

"Some have asked whether Solvency II reporting has got excessively complex, and the answer is yes. This is a huge fear for our members, who will face a kind of death by 1,000 spreadsheets.” Gregor Pozniak, Secretary General at the Association of Mutual Insurers and Insurance Cooperatives of Europe (Amice)

Solvency II is the updated set of regulatory requirements for insurance firms that operate in the European Union. It is scheduled to come into effect by the end of 2012.

It’s principal aim is to facilitate the development of a Single Market in insurance services in Europe, whilst at the same time securing an adequate level of consumer protection.

Based on consistent economic principles for the measurement of assets and liabilities, Solvency II is a risk based framework that directly impacts a firms capital requirements.

The Solvency II framework has three main areas (pillars):

• Pillar 1 consists of the quantitative requirements (for example, the amount of capital an insurer should hold).
• Pillar 2 sets out requirements for the governance and risk management of insurers, as well as for the effective supervision of insurers.
• Pillar 3 focuses on disclosure and transparency requirements.

The impact of spreadsheets on Solvency II

A significant proportion of the data required for Solvency II resides in spreadsheets and other end user computing applications. With the inherent control and data quality issues that spreadsheets entail, the ability to provide timely and quality data for solvency calculations and audit and disclosure purposes is a major challenge.

Spreadsheet Workbench from Finsbury Solutions can greatly assist with all three Pillars of the Solvency II framework by addressing data quality, spreadsheet integrity, transparency and operational risk.

Key features include:

• Providing a full inventory of risk assessed and prioritised Solvency II spreadsheets, Access databases and other end user computing applications.
• Identifying data dependencies, linked applications, process flows and usage patterns across all spreadsheet and supporting applications.
• A secure and audited central repository for Solvency II spreadsheets, ensuring transparency and data integrity across all spreadsheet versions
• A spreadsheet development framework to assist with the migration of key spreadsheets to enterprise platforms.
• Providing transparency and robustness around data integration processes with actuarial analysis and reporting platforms such as VIPitech, MoSes and EMB Igloo™.
• Best practice guidelines for spreadsheet modelling and documentation
• Freeing up important time for actuaries and accountants by automating inefficient business processes and manually intensive tasks.

To find out more about how Finsbury Solutions can assist your organisation with Solvency II please contact us now at info@finsburysolutions.com