EFAMA KPMG Solvency II Report

4 WORKING GROUP FINDINGS | 23
Challenges and Impacts
Insurers have yet to define the totality of the data set required for all three pillars of
Solvency II and so, in some cases where requirements have been communicated,
they have asked their service providers for all possible data points to determine lookthrough.
These may not be available or easy to source, for example:
• For standard formula purposes, the requirements are clearly defined but the service
providers have not been engaged by the insurers to provide the required information
• For fixed income, the data is available via ISINs and vendor relationships but there are
concerns for small and medium sized fi rms
• For Over The Counter (OTC) traded assets, the fund manager is the only source of
look-through information
A single asset manager or third party administrator will not have all the underlying
information available to define the level of look-through required by the Directive. Due
to the nature of servicing relationships in the industry, the data are likely to be sourced
from multiple vendors, providers and asset managers. In fact, a fund manager may not
have any direct insurance clients but may still receive look-through requests due to an
involvement in a fund platform or fund of fund structure.
This is likely to lead to an increase in the need for legal non-disclosure agreements
(NDAs) and licences between providers, and one of the challenges the industry will
face is the sensitivity of providing what is effectively commercial and intellectual
property not only to insurers but also other fund managers where fund of fund
involvement is present.
In addition, the look-through information is required to be the most recent available
and therefore there is no scope for mitigating the above issue by providing
historical information.
In most service providers, the data required to define the level of look-through is
not stored on a single platform or system. In addition, the level of automation of
data extraction varies wildly and in many cases, the data may not even be held
electronically. The collection of look-through data needs to be completed within
what are already very tight deadlines.
These rigorous and ultimately costly look-through requirements for fund of funds may
result in insurers changing their investment strategies and divesting in these types of
asset structures.
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