EIOPA Guidelines: Preparing for Solvency II Thursday, 2 May ... - PwC

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EIOPA Guidelines: 

Preparing for Solvency 

II 

Thursday, 2 May 2013

Implementation approach 

Garvan O’Neill 

Head of Financial Services Regulatory Practice 

EIOPA Guidelines- Preparing for Solvency II 

PwC 

May 2013 

Slide 2

Why the interim measures... 

“The present EU supervisory regime is not sufficiently risk sensitive 

and is to be replaced by Solvency II. It is in the best interests of 

policyholders, insurers, and supervisors to build on the steps taken 

already to prepare for Solvency II. Without such preparation, there is 

a risk that momentum is lost and the benefits of the financial and 

human resources already devoted to the Solvency II project are 

dissipated.” 



EIOPA Cover Note for the Consultation on 

Guidelines on preparing for Solvency II 


Slide 3

Where are we now... 

• Letter issued in October 2012 by the Chairman of EIOPA, Gabriel Bernardino, to the Omnibus II 

tialogue parties re: Solvency II timelines. The letter raised EIOPA’s concerns with respect to “stagnant 

Omnibus II negotiations and their impact on the Solvency II project” 

• EIOPA Opinion of 20 December 2012 on interim measures regarding Solvency II, setting out 

proposed actions to be taken by National Competent Authorities 

• Cover Note and Guidelines for the preparation of Solvency II (public consultation): 

• Issued on 27 th March 2013 to support preparation by NCAs and the industry on key aspects of Solvency II: 

- System of Governance, including risk management (CP 13/008) 

- Forward looking assessment of undertaking’s own risk (based on ORSA principles) – (CP13/009) 

- Submission of information to National Competent Authorities (CP 13/010) 

- Pre-application for Internal Models (CP 13/011) 




Slide 4

What are the timelines... 

2016 current best guess for full implementation 

However Interim Measures are the first real deliverable. Starting from 1 st 

January 2014. Time to start implementing! 

Level 1 

The Framework 

Directive 

Level 2 

Implementing 

Measures 

Interim Measures 

Level 3 

Guidelines and 

Binding Standards 

LTGA & 

ST* 

Dec 12– 

Apr 13? 

Issued by 

EIOPA for 

consultation 



2013 

LTGA & ST 

Report – 

Q2/3 2013 

Published 

by EIOPA 

Ongoing pre-consultations – Group 

supervision, Audit, etc. 

Omnibus II 

Vote Q3/4 

2013 

Finalisation 

by EC 

Implemented 

by CBI 

2014 

Transposition into national law 

Consult? Adopt and publish 

Effective from 1 st Jan 

14 – Governance, 

ORSA, Internal Model 

Pre-approval 

Consult and publish 

2015 2016 

1st 

Reporting 

to CBI 

Further technical 

standards and 

guidance? 

Effective 

date of 

1 Jan 16? 


Slide 5

Where are we now... 

Overview of the Cover Note for the Consultation on Guidelines on preparing for Solvency II 

Section 1 

Section 2 

Section 3 

Section 4 

Section 5 

• Purpose 

• Benefits of consistent preparation for Solvency II 

• What is expected of National Competent Authorities (NCAs)? 

• Nature of the Guidelines 

• Addressed to the NCAs 

• Outline of Compliance and Reporting requirements (compliance report, annual progress report) 

• Scope and Contents of the Guidelines 

• System of Governance 

• Forward Looking assessment of the undertaking’s own risks 

• Submission of information to NCAs 

• Pre-application of Internal Models 

• Approach 

• Principle of Proportionality; outline of ‘Phasing-in’ approach 

• Approach to small and medium-sized undertakings – the use of thresholds 

• Connection to pillar I Solvency II requirements 

• Timing and next steps 

• Consultation open until 19 th June 2013, final Guidelines to be issued in autumn 2013 

• Guidelines to apply from 1 st January 2014 




Slide 6

What do we have to look forward to... 

• Principles based Guidelines issued to prepare for Solvency II 

• NCAs to ensure that undertakings take steps towards implementing the Guidelines 

• No supervisory action to be taken for failure to comply with Solvency II requirements 

• Compliance Report to be issued within 2 months following final issuance* of the Guidelines 

• Compliance Report to detail measures taken at national level 

• Annual Progress Report to be issued by the NCAs by end February following each year of 

application of the Guidelines (1 st deadline: 28 th Feb 2015) 

_____________________________________________ 

* The date on which Guidelines are published in each of the official EU languages 




Slide 7

What do we have to look forward to... 

Use of thresholds during the preparatory phase 

• Applied to the following 2 aspects of the forward looking solvency assessment: 

(1) assessment whether the undertaking would comply on a continuous basis with the Solvency II regulatory capital 

requirements and requirements regarding the calculation of technical provisions, and 

(2) assessment of deviations from the assumptions underlying the solvency capital requirement calculation 

• Applied to the quantitative reporting requirements 

• Proposed thresholds: 

(i) Min. coverage by NCA of 80% of the market share 

(ii) Min. coverage by NCA of 50% of the market share 

(iii) €12 billion of total assets, or the equivalent amount in 

another national currency 



Solo annual set of 

quantitative reporting items 

Solo quarterly set of 

quantitative information 

Groups annual and quarterly set of 

quantitative information 


Slide 8

How the CBI will react... 

The CBI position pre-issuance: 

“The Central Bank has (...) decided not to bring forward proposals for early Solvency II 

implementation independently of action by EIOPA or other regulators. 

The Central Bank of Ireland is working closely with EIOPA to achieve a consistent and convergent 

approach across the EU to Solvency II implementation. This may entail early adoption by 2014 of 

some elements of Solvency II, primarily, but not limited to, Pillar 2.” 

The CBI intend to comply but emphasize that: 

• Proportionality will be applied (together with the application of thresholds), 

• These are Guidelines to assist in progression towards Solvency II, and 

• The explanatory texts are not part of the Guidelines. 



Central Bank of Ireland, 

December 2012 


Slide 9

What next for you... 

Colin Manley 

Tony O’Riordan 



• Systems of governance 

• Reporting to regulators 

David McGee • Data challenges 

• Forward looking assessment of the insurer’s own risk 

• Pre-application for internal models 

Garvan O’Neill • Conclusions and CRO Network 

Drinks reception 


Slide 10

System of governance 

Colin Manley 

Principal Consultant, Non Life Actuarial Practice 




Slide 11

EIOPA guidelines on system of governance 

Agenda 

1. What the Guidelines require 

2. Differences to the Corporate Governance Code 

3. PwC view on what you need to do 

4. PwC view on challenges you may face 




Slide 12


What do the guidelines require? 

Undertakings to take appropriate steps to: 

• Build an effective system of governance according to the Solvency II Directive 

• Build an effective risk management system 

• Evidence the system of governance for the CBI 

CBI to report progress to EIOPA following each relevant year – first at end February 2015 




Slide 13


What do the guidelines require? 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

• General Governance 

Requirements 

•Fit and Proper 

Requirements 

•Risk Management 

•The “Prudent Person” 

Principle 

•Own Fund Requirements 

•Internal Controls 

•Internal Audit Function 

•Actuarial Function 

•Outsourcing 

•Group Governance Specific 

Requirements 



• 57 Guidelines 

• Guidelines develop on Articles 40-49 of the SII 

Directive 

• New aspects - Own Funds (Article 93) and Prudent 

Person Principle (Article 132) 

• Consistent with: 

Summary of Guidelines 

• prior consultations 

• Corporate Governance Code (2010) 

• Insurance Core Principles published by IAIS 


Slide 14


Differences from the code 

• Code more focused at Board level 

• Code prescribes size of Boards, numbers of directorships, minimum 

number of meetings – the Guidelines do not 

• Guidelines are more prescriptive: 

- Key Functions 

- Detail of Risk Policies 

- Focus below Board level 

• ‘New’ governance aspects introduced 




Slide 15


New in guidelines 

Prudent 

Person 

Principle 

Own Funds 

Group 

Governance 



• Develop set of key indicators (concentration metrics, sector 

allocations, ratings / security metrics) for investment management 

purposes 

• Particular duty of care for investments ‘outside the norm’ e.g. 

derivatives, private equity etc. 

• Capital Management Policy 

• Medium-term Capital Plan (including Dividend Policy) 

• Specific governance and risk management requirements at Group 

level 


Slide 16


Key actions and challenges 

Key Functions 

1. Risk Management 

(and System) 

2. Actuarial Function 

3. Internal Audit 

4. Compliance 

Outsourcing 



Forward Looking 

Risk Assessment 

‘ORSA’ 

Reporting to Regulators 

Proportionality 


Slide 17


Key functions: risk management 

Actions 

Challenges 



• Establish a Risk Management Function 

• Develop (Update) Risk Management Policies 

• Implement a Risk Management System 

− to include Internal Model management 

• Division of responsibility 

• Independence / Objectivity 

• Dual Roles 

• Availability of talent / broader skill sets 

• Granularity and prescription of Risk Policy detail 

• Demonstrating compliance 

• Appropriateness of MI 

• Managing the Internal Model process 


Slide 18


Key functions: actuarial function 

Actions 

Challenges 



• Decide on mechanism for establishment of an Actuarial Function (“AF”) 

– Internal, External, Cross department 

• Allocate responsibility for each required task 

• Decide on nature and extent of reporting from AF 

– Technical Provisions, Data Quality, Experience Testing 

• Not previously a formal requirement 

• AF not necessarily an Actuary 

• Dual regulation period: Solvency I and ‘quasi-Solvency II’ 

− 2 sets of technical provisions? 

• Does AF apply for companies below threshold? 

• Oversight role? Validated versus calculate? 

• Outsourcing AF: Fit & Proper 

• Additional AF Tasks: conflicts of interest e.g. pricing 

• Reporting lines for the AF: CFO? CRO? CEO? 


Slide 19


Key functions: internal audit and internal controls 

Actions 

Challenges 



• Likely no substantive actions 

• Internal Audit and Compliance functions already in place 

• New skill sets required of Internal Audit 

− Internal Model 

− Standard Model 

− Risk Management System 

− Data quality assurance 

• Resourcing the Internal Audit function 

• Reliance on Group for technical skills 


Slide 20


Forward looking assessment (‘ORSA’) 

Actions 

Challenges 



• Develop ORSA policy 

• Board steer how the ORSA process is conducted 

• Board to challenge the ORSA 

• Board required to play an active part 

• Board skill set to increase 

• Documentation and record keeping of ORSA process 


Slide 21


Outsourcing 

Actions 

Challenges 



• Review current arrangements 

− check F&P requirements 

• Decide what is going to be outsourced 

• Guidelines extend beyond current CBI F&P requirements 

− no specific exclusion relating to other regulated financial 

service provider 

• Governance of outsourced activities 

• CBI challenges? 


Slide 22


Other 

Reporting to 

Regulators 



• The Guidelines require undertakings above the threshold to report 

‘interim’ information to the regulators 

• What will be the governance structure around this? 

• Qualitative reporting also requires narrative information on adherence 

to general governance requirements 

Proportionality • Applies to every element of System of Governance 

• Solvency II not prescriptive around this but also little guidance 

• Consistency of application 


Slide 23

Reporting to regulators 




Slide 24

EIOPA guidelines on reporting to regulators 

Submission of information to regulator 

What? 

• Quantitative & qualitative information required is a subset of the full package published in July 2012 

(approx 40% of templates) 

• Still a significant amount of information 

• Internal Model pre-application companies should submit both model and standard formula 

calculations 

• Assumption that Pillar 1 requirements agreed and known by 2015 

When? 

• Annual: Financial year end on or after 31 December 2014 – no later than 20 weeks after year end 

• Quarterly: Quarter ending 30 September 2015 – no later than 8 weeks after quarter end 

Who? 

• Annual 80%, Quarterly 50%, guidelines applied in a manner which is proportionate 




Slide 25

EIOPA guidelines on reporting to regulators 

Submission of information to regulator 

Decision 

in the 

balance 



Wait and See: 

Solvency II timetable has slipped a lot so far, it 

may do so again 

Why invest in hitting a moving target 

There may be 2 nd mover advantages 

Begin preparations: 

95%+ of the requirements known 

Substantial lead-in time will be needed to prepare 

Much is useful info and should sensibly be used 

Fulfil ECB needs 

Regulators - increasing focus on risk 

analytics 


Slide 26


PwC experience 

An automated solution is required – meet 

deadlines, cope with granularity, reduce 

administrative burden, more robust quality 



It is a large development – can easily be 9-12 

month project (assuming data already in place) 

It is a cross functional project – Actuarial, 

Finance and IT 


Slide 27

Forward looking assessment of 

undertaking’s own risks (on ORSA 

principles) 

Tony O’Riordan 

Head of Life Actuarial Practice 




Slide 28

Principles 

CBI to ensure “a forward looking view on the risks to which they are exposed similar t0 

what they will have to do once Solvency II will apply”. 

“...this assessment can be undertaken irrespective of what regulatory quantitative 

requirements are applicable ... perform an assessment of ... overall solvency needs as of 

2014” 

“assessment of continuous compliance with regulatory capital requirements .... 

assessment of significance of deviation of risk profile...from.. .SCR according to...Solvency 

II ... can only be performed on the basis as if the undertaking would need to comply with 

these requirements” 

“...undertaking should decide for itself how to perform this assessment...” 

Boards “aware of all material risks”, “active role in forward looking assessment ...by 

directing and challenging its performance” 

“...high level of consistency in processes across the group...” 

“Undertakings applying for the approval of an internal model are expected to use the 

model...” 




Slide 29

Structure and overview 

Section 1 

Section 2 

Section 3 

Section 4 

• Introduction 

• Implementation Date, Thresholds, Principles 

• General Considerations 

• Proportionality, Board Approval, 

Documentation of Policy, Reports 

• Forward looking assessment of own risks 

• Assessment of overall solvency needs, forward 

looking, regulatory capital, technical 

provisions, deviations from SCR, used in 

decision making, frequency 

• Group considerations 

• Group level requirements in relation to the 

above, internal models, non-EEA business 



Summary 

• Guidelines develop on Article 

45 of the SII Directive 

• Guidelines almost identical to 

consultation document issued 

in July 2012 (CP08) 

• Aligned with Insurance Core 

Principle 16 published by IAIS 

in 2008 


Slide 30



Nothing New? 

Nothing to 

Worry About? 


Slide 31

Outline of provisions 

General 

considerations 



•Build process and qualitative 

information 

•CBI progress reports to EIOPA 

•80% and Group requirement for 

continuous SII compliance 

assessment 

•“Plan B” requirement for IMAP 

companies 

•Assessment of significance of 

deviation for non-IMAP companies 

•Own, tailored processes 

(proportional) 

•Board takes active part 


Slide 32


General 

considerations 



•Board to approve policy 

•Each FLA to be “appropriately” 

evidenced and documented 

- Policy 

- Record 

- Internal report 

- Supervisory report 

•Results and conclusions to be 

communicated internally 

•Submit “supervisory report” 

within 2 weeks of “concluding the 

assessments” 


Slide 33


Assessment of 

solvency and 

compliance 



•Requirement to explain benefits 

and quantify impact of 

methodology other than SII 

•Quantitative solvency 

requirements, qualitative risk 

description with stress tests 

•Medium to long term perspective 

•Assess continuous compliance 

allowing for changes in risk 

profile 

•Actuarial function to provide 

input 


Slide 34

General provisions for preparatory guidelines 

Assessment of 

solvency and 

compliance 



•Assess deviation of risk profile 

from assumptions underlying SCR 

calculation (qualitative initially) 

•Use test – consider FLA in 

- capital management 

- business planning 

- product development 

•FLA at least annual 


Slide 35

General provisions for preparatory guidelines 

“Group” guidelines 



•Reflect group structure and risk 

profile. All entities in scope. 

•Single FLA? Subsidiary entity 

and Board explanation. 

•Allow for group specific risks and 

strategies 

•Transferability, fungibility of 

capital 

•Report on entities not using 

internal model 

•Consistent treatment of third 

countries 


Slide 36

Issues emerging which may invite comment 

• Comply with Solvency II 

requirements though not 

finalised 

• How to reflect Solvency I? 

• Fixed commencement 

irrespective of SII start 

• “as of 2014”? 

• Definition of Group 

• Consistency across Group 

• 4 documents 



• Use internal model but “Plan B” 

• Explanation of benefits of non- 

SII methods 

• 2 week submission requirement 

• What is the role of the actuarial 

function? 

• Requirement to use internal 

model if in IMAP 

• Will NCAs comply? What if 

different approaches? 


Slide 37

Key considerations and challenges 

What areas require your action or consideration? 

Solvency II Numbers 

Point in time and 

continuous 

Documenting the 

Process and Policy 

and Producing the 

ORSA Reports 



Projecting 

Capital 

Internal Model Approval 

(where there is one) 

The Use Test 

Largest 

80% 

All 

companies 


Slide 38

The use test – embedding risk management in 

business strategy and decisions 

Risk Identification and Assessment 

Risk identification 

Qualitative assessments 

Controls assessment 

Risk ranking and classification 

Risk profile 

Risk management policy 



Business objectives 

Risk strategy 

Strategy options 

valuations 

Capital strategy 

Capital plan 

Financial plan 

Business Strategy 

Solvency Assessment and Management 

Economic balance 

sheet 

Technical provisions 

Risk parameters and 

assumptions 

Own fund 

classification and 

assessment 

Strategic asset 

allocation 

Reinsurance / hedge 

Management 

actions 

Projection horizons 

Actual vs. Plan 

Stress / scenario testing 

Capital fungibility 

Internal capital 

requirement 

Regulatory capital 

requirement 

Reconciliation 

External Environment 

Business context 

Emerging risks 

Long-term risks 

Macroeconomic environment 

Regulatory framework 

Legal framework 

Social trends 

Decision Making 

Regular monitoring of risk profile 

Solvency monitoring and management 

Risk appetite / tolerance 

Frequency of assessment 

Support for strategic decisions 

Evidence of risk governance processes 

Disclosure 


Slide 39

Reinsurers and 

Non-Life insurers 

may need to 

enhance new 

models 

“Top 80%” Need to 

cope with Solvency 

II numbers 



Projecting capital 

• Life insurers will be familiar with projecting 

capital for triennial Financial Condition Reports 

(FCRs) 

• Annual reporting: Time and cost issues 

• Reinsurers and Non-life insurers have had no 

previous regulatory requirement to project capital 

• Models will need to be built to produce 

numbers 

• Need to determine appropriate time horizon for 

projections 

• Guidelines refer to “business planning period” 

• Solvency II numbers for “top 80% of market” 


Slide 40

Within the ORSA 

Guidelines this is 

the No.1 

Implementation 

Challenge for 

companies within 

80% scope 



Solvency II 

For “top 80% of Market” 

• Capital and Reserve numbers within ORSA are to 

be calculated on a Solvency II basis 

• Best estimate liabilities 

• Solvency Capital Requirements 

• Assess deviations of own risk profile from 

assumptions underlying SCR calculations 

• Complexity in projecting economic capital 

numbers is not to be under-estimated 

• Projections within projections 

• Data and IT processing power 

• Theoretically no regulatory intervention if SII 

numbers breached but this raises difficult issue 

for CBI 


Slide 41

Key considerations and challenges 

What areas require your action or consideration? 

Solvency II Numbers 

Documenting the 

Process and Policy 

and Producing the 

ORSA Reports 



Projecting 

Capital 

Internal Model Approval 

The Use Test 

Largest 

80% 

All 

companies 


Slide 42

Pre-application for internal models 




Slide 43

EIOPA guidelines on pre-application of internal 

models 

Overview 

Summary of guidelines 

1 

2 

3 

4 

5 

6 

7 

8 

9 

•General guidelines 

•Model changes 

•Use test 

•Assumption setting and 

expert judgement 

•Methodological consistency 

•Probability distribution 

forecast 

•Calibration - approximations 

•Profit and loss attribution 

•Validation 

10 •Documentation 

11 

12 

• External models and data 

• Functioning of colleges 



• 72 Guidelines in total covering various aspects of 

the Pre-Application of Internal Models for 

approval 

• Many supervisors have established preapplication 

processes to help insurers through 

the journey to submission of a final internal 

model application 

• EIOPA’s draft guidelines aim to formalise this 

process in response to pressure from the 

industry and to increase convergence of 

supervisory practices across the EU 

• The draft guidelines cover a number of areas 

which national regulators should review 

• No game changers for IMAP – bar remains high 


Slide 44

CBI process 

assessed by 

EIOPA to be 

well developed 

relative to 

others 



Key new requirements and 

challenges 

New requirements 

• “Validation report” setting out results and 

conclusions drawn from validation process 

• “User manual” for operation of model 

• For group models, an agreed “work plan” 

between group and local supervisors 

Ongoing challenges 

• Considerable interpretation still required, eg 

documentation, use test, understanding of 

Board, model changes 

• Proportionality? 

• Regulator consistency 


Slide 45

Data challenges 

David McGee 

Partner, Advisory Consulting 




Slide 46

Impact of Solvency II on the insurance industry 

Reporting requirements Client issues 

Accuracy 

Completeness 

Timeliness 

Availability 

Traceability 

Scalability 



“Manual steps in my data collection and reporting process result in 

erroneous output.” 

“How to consolidate data from a variety of source systems, formats and 

definitions into a single report.” 

“With the time consumed in collecting data and consolidating reports from 

solo entities, meeting reporting deadlines is cumbersome.” 

“Leveraging data collected as part of Solvency II requirements beyond mere 

disclosure, proves to be a challenge.” 

“Traceability of approvals, manual adjustments and corrections is lost 

throughout the reporting process.” 

“Keeping track of data elements in QRT reports and tracing them back to 

source systems is challenging.” 

“The volume of data required and the number of source systems, means 

that I can no longer do this manually.” 

How to leverage technology to meet Solvency II reporting 

requirements is going to be key to success 


Slide 47

MI – common industry challenges 

What is going on with the data? 

Slow 

Strategically 

misaligned 



Insufficient 

Not effective 

Not 

insightful 

Multiple 

versions 

Too detailed 


Slide 48

MI – common industry challenges 

Data is complex 

You may not 

believe what you 

see 

81 % 

don’t have quality 

source data 



You may be basing 

decisions on 

intuition more 

often than ideal 

40 % 

of companies have 

not implemented 

the KPIs they 

need 

Source – PwC’s European Corporate Performance Management (“CPM”) survey 

You may not be able 

to give transparency 

to key stakeholders 

73:27 

Time spent 

producing/ Time 

spent analysing 

ratio. Desired 40:60 

You may not be able 

to demonstrate that 

you are in control 

74 % 

of companies think 

scenario analysis is 

important, only 

26% do it regularly 


Slide 49

Finance today 

Current: Siloed data 

Embedded 

Business 

Partners 

BU A 

BU B 

BU C 

Business 

Partnering , MI, 

Forecasting 

Group finance, 

Investor 

Relations, M&A 

Future: Integrated Data 

Business 

Partnering , MI, 

Forecasting 

Group finance 

Reporting and 

controls 



CFO 

Back office, 

transactions, 

Valuation / 

Reserving 

Chief 

Actuary 

ALM 

Capital 

Management 

Oversight, 

Policy 

CRO 

Risk Reporting 

and Control 

Actuarial, Data, Assumptions, Systems, 

Back office, transactions, Risk Data, Systems, Controls 

Controls, Shared Services 

CFO 

Back office, 

transactions, 

shared services 

Valuation / 

Reserving 

Chief 

Actuary 

ALM 

Capital 

Management 

Common Data, Assumptions, Systems, Controls, Shared Services 

CRO 

Oversight, 

Policy 

Risk 

Committees 

Risk 

Committees 

Investor Relations 

Finance and 

Risk Business Partners 

Risk Escalation 

in the business 

Capital Strategy, Allocation 

BU A 

BU B 

BU C 

BU A 

BU B 

BU C 

Integrated Financial and Risk 

Reporting and Controls 

Change Function 


Slide 50

Lessons learned 

Implementing Solvency II reporting solutions should be considered a business driven initiative, as 

opposed to technology driven. Data quality should be addressed throughout the implementation 

initiative. 

Data 

Paradigm shift 

Automation 

Processes 

Currencies 

Management 


SME input 

Stakeholders 

Data integration 

Standardisation 

Requirements 



Data requirements are onerous for Pillar 3! 

The current templates and requirements e.g. QRT templates D (assets) & F (technical provisions) 

represent a major shift from current reporting. 

Manual processes will only take you part of the way, embedding robust technology solutions takes time. 

New processes will need to be developed and embedded in Finance, Actuarial and Risk to meet 

timelines, while delivering BAU reporting 

Successfully handling multiple currencies should not be underestimated. 

Capital and Risk MI, has this got sufficient existing focus? When the project is kicked off, make sure to 

assess how far the MI has developed... 

SME input is important – actuaries, finance, risk and capital, project leads (Solvency II Pillar 1 & 2, and 

other projects), PwC, ... 

Don’t assume that Stakeholders have thought through what their Solvency II & MI requirements are... 

Don’t underestimate the volume of data and number of integrations... 

Standardisation of metrics, data model, reporting outputs – build once, use everywhere! 

Be mindful of building in dependencies that are not required for BAU. These must be maintained... 


Slide 51

An inability to gather and understand data were viewed as major 

concerns for companies’ growth prospects 

• How concerned are you, if at all, about the following potential threats to your 

company’s growth prospects? 

% stating somewhat concerned 

/extremely concerned 

Total 

New market entrants 48% 

Availability of key skills 59% 

Energy costs 54% 

Security of supply chain 52% 

Permanent shift in consumer behaviours 66% 

Inability to finance growth 41% 

Inadequacy of basic infrastructure 45% 

Increasing tax burden 51% 

Inability to gather, understand and act on all the data 

about our customers 

69% 

Inability to quickly understand and adopt new 

information technologies needed to be competitive 

Base: 489 



67% 


Slide 52

Technology challenges 

• 41% of Change projects fail (Of the 59% that ‘succeed’ only half 

meet Senior Management expectations)” CSC Index/AMA Survey 

• “25% of all projects fail completely, 50% end up late or over 

budget & only 25% actually succeed” PWC Research 

• “Only 16% of IT projects hit all their targets” Computer Weekly 




Slide 53

Solvency II reporting 

Finding a technology solution 

Solvency II is going to require an industrialised approach to risk evaluation and 

regulatory reporting. Without an effective IT infrastructure, companies will 

likely find that complying with the new wave of regulation is unsustainably 

labour intensive. 

• Where is the data? Who owns it and what state is it in? 

• What kind of IT architecture will be needed? 

• What are the key criteria for selecting the right technology for your business? 

• How can you make the most of your investment? 



Timeline to 

Implement 

flexible 

Technology can’t get you up to speed 

on its own. You will also need timely, 

reliable and consistent data. 

Maintenance 


Slide 54

What does the solution look like? 

Solvency II solution architecture 

General ledgers 

Asset management 

Policy administration 

CRM systems 

Underwriting 

systems 

ETL 



Reporting 

Data Warehouse 

Workflow engine 

Consolidation 

Risk management 

Other Metadata management 

Source 

data 

Data 

integration 

Staging 

Single 

source of 

truth Results 

ETL 

Calculation engines 

Projection 

Aggregation 

Scenario-analysis 

Disclosure 

management 

Management 

reporting 

Solvency 2 

Financial 

Data 

Reporting 

Data storage Applications Reports 

integration 

tools 

Risk 

Investment 

Other 

management 



Slide 55

In conclusion. . . 

1 

3 



One source of the truth 

An appropriate data model taking into 

account all pillars 

2 

Revisit your target operating model 


Slide 56

Questions 

Garvan O’Neill 




Slide 57

In conclusion… 




Slide 58

Risk Management is a multi-disciplined function 

No dedicated forum 

currently exists in 

Ireland that includes 

all of the different 

professional skills 

that feed into risk 

management 



Accountants 

Actuaries 

Operations 

and 

Compliance 


Slide 59

Key Aims: 

1. Encourage 

Good Practice 

Risk 

Management 

2. Encourage 

discussions 

and debate on 

emerging risk 

issues 



CRO Network 

For Life, Non-Life and Reinsurance companies 

Participation open to individual within 

organisation responsible for risk function, e.g. 

CRO plus one other 

Regular quarterly meetings 

Content of meetings will include high quality 

presentations and discussions 

Speakers from the industry and PwC 

Meetings facilitated by PwC..... 

....based on input from the CROs and 

companies to ensure the Network meets your 

needs 


Slide 60

Benefits of CRO Network 

An opportunity for Risk Managers to discuss matters that 

really matter to them 

Risk function 

structure and 

operational 

challenges 

Share insights on risk 

practices within the 

industry (locally and 

internationally) 

Risk reporting and risk 

measurement challenges 



Highlight 

emerging risks 

Discuss challenges 

encountered by risk 

functions in the 

delivery of risk 

frameworks and risk 

policies 


Slide 61

CRO Network 

PwC Facilitation 

Aim for first meeting in late August/early September 

• Invites will be issued a few weeks in advance 

Likely to be a breakfast meeting in PwC office 

Potential topics for discussion detailed in feedback form 

We will react to your views 




Slide 62

Thank you. 

This content is for general information purposes only, and should not be used as a substitute 

for consultation with professional advisors. 

© 2013 PricewaterhouseCoopers. All rights reserved. PwC refers to the Irish member firm, and 

may sometimes refer to the PwC network. 

Each member firm is a separate legal entity. Please see www.pwc.com/structure for further 

details.

EIOPA Guidelines: Preparing for Solvency II Thursday, 2 May ... - PwC

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