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Are you ready for Solvency II?

Senior XBRL Strategist, Enterprise Disclosure Management, IBM

For insurance companies across Europe, 1 January 2016 is the deadline for the first round of mandatory reporting under Solvency II. Insurers will need to file regular reports with their national regulators that present a 360-degree view of a firm’s risk exposure. However, this looming deadline—as experience in related sectors such as banking suggests—is only the beginning of what is likely to be ever-expanding demands from regulators for greater amounts of information, more often. 

Solvency II regulatory compliance has become even more challenging for insurance firms during 2015, as regulators issued significant and all-encompassing changes to their requirements for “Full Measures” filings due in 2016. Some software vendors that supply solutions to insurers in this market have been struggling to manage these new requirements—with some even withdrawing support altogether.

http://www.ibmbigdatahub.com/sites/default/files/solvencyii_blog_5.jpgOvercoming Solvency II reporting challenges: Technological hurdles and best practices

While insurers often focus on data acquisition and calculations, the final step in the Solvency II process—supplying this data to the regulator—is not as simple as it might seem at first. This is due in large measure to the requirement to submit a large portion of this data in XBRL, an XML dialect adopted by numerous regulators around the world such as the US Securities and Exchange Commission and the European Banking Authority. However, this requirement can be significantly simplified with software designed specifically to remove this technology pain point for business users. In fact, hiding the complexities of XBRL is crucial if this final step in the reporting process is to be efficient and repeatable.

An additional regulatory and technological hurdle is the requirement that the data be validated before submission, according to hundreds of mandatory business rules. While these rules have been translated into XBRL by the regulator, applying them at the point of submission is:

  • Inefficient, as this occurs too late in the process
  • Extremely time-consuming, given the power of even the fastest XBRL processors, necessitating many hours of processing for the large volumes of data required by the Solvency II mandate

As a best practice, such validations should optimally be done as rapidly and as early in the process as possible, saving insurers valuable time and IT resources.

The IBM Cognos Disclosure Management Solvency II reporting tool gives insurers the confidence to meet their Solvency II regulatory requirements, with support for new “Full Measures” changes and the flexibility to handle future updates. With capabilities such as “on-the-fly” validation that let insurers apply validation rules throughout data collection—and abstracting XBRL complexities for users by locating it “behind the scenes”—IBM Cognos Disclosure Management represents a critical reporting and support tool for insurance firms.

To get a brief introduction to the features and benefits of the IBM Cognos Disclosure Management Solvency II reporting tool, check out this short overview video.

Learn more, with in-depth details on how this software can transform your business and regulatory reporting, in this video: