EFAMA KPMG Solvency II Report

4.2 Data Management
4.2.1 Data Delivery
4 WORKING GROUP FINDINGS | 27
Requirements
Solvency II requires insurers to deliver their Solvency Calculations and their
Quantitative Reporting Templates (QRT’s) within six weeks of each quarter end to their
regulator. This is substantially earlier than required by current reporting regulations.
Consistent data must be utilised for Solvency calculation and statutory reporting;
hence insurers will require comprehensive, enriched details of the assets managed on
their behalf for both Pillar 1 and Pillar 3 much earlier than currently provided.
Given these timeframes and the significantly greater volume of data to be provided,
asset managers are required to provide their insurance clients with more complex data
at a more granular level and to a higher quality standard within a shorter timeframe.
Challenges and Impacts
Despite Solvency II requiring quarterly reporting to regulators, most insurers are
intent on running their solvency calculations on a monthly basis to fulfil their Own Risk
Solvency Assessment (ORSA) obligations under Solvency II. This will result in asset
managers being required to supply insurers with the complete data information on a
monthly basis.
The trend, already visible in the market, is for Solvency II asset data to be requested
for delivery by business day three each month. Meeting these delivery timelines will
have significant impact on the operating model of asset managers and their third party
administrators (TPAs) as the information currently available on business day three may
not meet the rigorous granularity and quality standards for Solvency II data.
In addition, the data required for Solvency II includes data relating to assets which
are not traditionally valued until after month end (such as private equity, hard to price
assets and collateral holdings) as well as funds which are not priced until the fi rst or
second day of each month (such as multimanager funds or overseas asset funds).
There are also likely to be issues regarding the consistency of data being provided
by different suppliers.
The lack of a uniform mechanism to transfer asset data between asset managers, TPAs
and insurers is bound to lead to substantial development costs. Additionally, the lack
of standard file formats and security infrastructure will increase the costs across all
parties involved in the provision and receipt of asset data.
The legal impacts of supplying confidential data between parties also need to be fully
aligned. Parties need to ensure that all necessary legal agreements including nondisclosure
agreements (NDAs), service level agreements (SLAs) and data licensing
agreements with data vendors are in place prior to the commencement of test data
transfer. These agreements may vary across the insurance industry and are an urgent
issue which must be addressed in the very near future given the lead times of getting
such agreements in place.
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International
Cooperative, a Swiss entity. All rights reserved.