Nearly five years has gone by since Solvency II came into force. What have we learnt, and where do we go from here?
Most companies have found Solvency II to be a time-consuming exercise. Annual reporting, which requires large amounts of data and includes detailed validations is particularly challenging.
For many, now may be the time to take stock and reconsider processes and systems with a view to reducing the time spent on compliance aspects.
In this article I share my advice based on our experience helping clients through the process so far.
Don't leave it to the last minute
It is often tempting to wait until accounting and other reports are finalised before considering Solvency II. This can create extra work if Solvency II data extracts are produced at a different time to those for other purposes (both in terms of performing the process multiple times and additional reconciliation due to potential changes between the dates of the two data extracts).
Producing all the data required for reporting at the same time will improve both efficiency and consistency between different reports.
Correct data at source
With deadlines looming, it is often tempting to make corrections directly in the reporting system. If this data comes from a different system, it is easy to forget to make the corrections there later. The same error will then occur next time.
Good routines around correcting data at source will ensure that the reporting process becomes more efficient over time
Learn and improve each year
Every year we experience things that could be made more efficient. Some of these lead to system change to automate things and/or make improvements which will save time next year.
However, after a long and arduous reporting process, it is often tempting to move onto other things as soon as the final report is submitted. This means that not all potential improvements are followed up on.
Take time after the reporting process to review potential improvements, both in internal processes and in systems. Speak to you providers to ensure any necessary changes are implemented before the next reporting period.
Stay on top of changes
EIOPA updates the XBRL taxonomy and reporting templates on an annual basis. These changes are published in draft around June each year and then finalised later in the year. They apply from 31 December each year (i.e. for the Q4 and annual reports)
To date these annual updates have been relatively minor, but more significant changes have been proposed. It is important to keep up-to-date and review any such changes well in advance of the Q4 and annual reports.
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