Countdown to Solvency II - Pillar 3 - Reporting and Disclosure

One of the boldest elements of the forthcoming SII regime is surely the goal of targeting consistent, efficient and transparent public and private reporting across the sector - both annually and quarterly. Pillar 3 is now at the forefront of most insurers’ minds given its wide reaching implications and dependencies on the wider SII framework. The good news is that there is still some time remaining until the first annual interim reports are due (for threshold firms) which should give organisations the ability to take stock of their SII programme and continue to iterate much what has already been developed.

 By Vivek Syal, Director at PwC
 The not so good news is that too many insurers (including non-threshold firms) are simply not ready to tackle head-on the granular pillar 3 requirements, and the clock is now starting to tick a little louder.
 The industry is rightly focussed on the detailed Quantitative Reporting Requirements (QRTs) and is starting to make good progress towards these. The focus will then shift on to the wider pillar 3 requirements, including the Narrative reporting items, and so my first post offers up a few pointers in support of your pillar 3 projects as you continue to work through these:
 • Process and System Improvements: The speed and volume of reporting for many insurers will need to increase – in some cases considerably so. This may mean changing your existing close processes and/or automating manual processes to deliver to the accelerated timelines. In doing so, system development/procurement should be factored into the equation keeping in mind the consolidation or aggregation of entities within scope.
 • Planning: The Solvency and Financial Conditioning Report (SFCR) and the Regular Supervisory Report (RSR) should not be too far away from your critical path at the moment. Assessing the requirements and mapping out the structure and outline of these reports is key for your pillar 3 projects. In doing so, you should be able to identify how existing reporting e.g. your Own Risk and Solvency Assessment (ORSA) can be leveraged to avoid inefficiency. Clear and proactive planning should furthermore enable you to identify any potential resource constrains well in advance.
 • Join the dots across the three pillars: The detailed pillar 3 requirements link with other activities prepared in pillars 1 and 2. For example, you should look to utilise technical provisions methods and assumptions information captured in the actuarial function report in the narrative reporting requirements of pillar 3. In identifying these numerous touch points, you will save time and avoid any unnecessary duplication of effort.
 • Integration: The sheer breadth of information included with your pillar 3 reporting brings various functions/stakeholders (both internal and external) together in a new and often challenging way. One of many advantages of developing a robust ORSA process and operating model is that several of these internal functions e.g. Finance, Risk, Actuarial, Underwriting etc. will need to get used to working in an integrated fashion and so building on this foundation will be important for the delivery of Solvency II reporting and disclosure requirements.
 • More Granular Data sounds great, and it is! At a recent industry conference, I heard candid comments that data collection, controls, granularity and quality is an area where the industry can all go further. The key questions to ask include the level of detail your existing data warehouse/storage facilities hold and how you are plugging the gaps you have identified when mapping to the requirements. For organisations delegating a significant portion of their underwriting activities, there is an added bonus here to streamline your coverholder processes to ensure consistent quality information is received.

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