Countdown to Solvency II

Countdown to Solvency II is PwC's flagship Solvency II publication, exploring the latest developments in Solvency II. It provides insight into key issues and assists insurers in assessing the implications of the Solvency II directive and in preparing for the changes ahead.

New article launched November 2011

Risk of delay: Getting Pillar 3 on track
With supervisors likely to require extensive transitional disclosure in 2013 and getting ready for full reporting in 2014 set to demand a huge step up in data, systems and governance, preparing for Solvency II disclosure (Pillar 3) can’t be put off any longer. Meeting the reporting demands will require organisational involvement and understanding far beyond Solvency II project teams. Boards should be involved from the outset, getting used to the disclosure, aligning it with their own management information and using it to help run the business. It is also important to build Pillar 3 into any decisions over process re-engineering and operational design so it becomes sustainable and enhances value. So how can you get Pillar 3 on track, who should be involved and what are the potential bottlenecks to be overcome?

New articles launched July 2011

Managing the impact of Solvency II on your credit rating
Rating agency analysis increasingly considers your Solvency II implementation plans including associated strategic change. In turn, your enterprise risk management (ERM) effectiveness is fundamental to both Solvency II and rating agency assessments. Solvency II may therefore impact your credit rating. How are rating agencies responding to Solvency II and how can you seek to ensure that the impact on your rating is not negative?

Is a full internal model a step too far?
The choice between an internal model and the standard formula not only has a strong influence on an insurer's capital requirements, but also the way the company is run and engages with stakeholders. It is important to regularly review the decision to make sure it continues to meet the best interests of the organisation as its business profile and market landscape evolves. The potential for transitional measures and possibly a delayed implementation date provides an opportunity to take a step back and review this decision. Which model is the best fit for your business?

Managing spreadsheet risks
While spreadsheets will remain an important tool under Solvency II, they can be inherently difficult to control. Reducing dependence on spreadsheets will therefore be the first priority under Solvency II, though eliminating them altogether is likely to be unfeasible

New article launched June 2011

Validating your model
If your company wants to achieve internal model approval in the first wave, model validation should be underway. What does model validation involve? What are the potential pitfalls? And how can you get your validation on track without tying yourself up in needless effort?

New article launched May 2011

Taking the strain out of technical provisions
Getting to grips with the technical provisions is proving to be one of the toughest and most time-consuming aspects of Solvency II. Are there any ways to make it simpler?

New article launched April 2011

Getting the balance right: Preparing and managing documentation under Solvency II
Your documentation is the public face of your Solvency II programme. It helps you to make a convincing case to your supervisor that your capabilities and approach are fit for purpose. How can you provide the right kind of documentation to demonstrate compliance without swamping your business in needless paperwork?

New article launched February 2011

Making your capital work harder: Insurers seek to structure their operations so that they are capital and tax efficient – Solvency II has changed the playing field
The fifth quantitative impact study (QIS5) has demonstrated that capital management structures that are tailored to existing regulation are likely to be less efficient under Solvency II. What can you do to improve your capital position?

New article launched January 2011

Meeting the people test: Instilling risk awareness into the culture and decision making of your organisation
As Thomas Steffen (former Chairman of CEIOPS) said "Solvency II is not just about capital. It is a change in behaviour." This change in behaviour will be a critical element of meeting the use test - after all, models don't make decisions, people do. Every insurer implementing Solvency II will need to ensure its work streams include people issues, looking at how to make risk management a more prominent feature of reward, training, performance management and governance structures. However, any changes will be only skin deep and unlikely to convince supervisors without an underlying culture that promotes the necessary risk awareness. This article explores the key features of an effective risk culture, how this culture manifests itself and how it can be instilled into the organisation.

New articles launched October 2010

Driving capital efficiency: Using Solvency II as a catalyst for more efficient capital, cost and tax structures
Solvency II will intensify the pressure on capital, cost and tax efficiency, making the potential benefits from corporate restructuring even greater.

Driving the ORSA into decision making: Preparing the Own Risk and Solvency Assessment (ORSA) and building it into the running of the business
The ORSA is set to be the main engine for embedding Solvency II into the business, requiring insurers to put a prospective view on their risks and their implications at the heart of decision making.

Confidence in the model: Developing a framework for delivering reliable data and model assurance
If insurers are not confident about the reliability of their data and the governance surrounding their models, they cannot be sure about the quality of the information coming out, and neither will their supervisor. How can insurers make sure that their models stand up to scrutiny?

Up to speed with reporting: Keeping pace with faster turnaround time for regulator returns
The work needed to successfully deliver Solvency II won't end in 2012 as the required turnaround for quarterly returns is steadily cut from six to four weeks and reports to supervisors from 18 to 14 weeks between 2013 and 2015.

Coming up with the numbers: Preparing a Solvency II balance sheet and managing the impact on market communications
The Solvency II balance sheet will differ markedly from both current and future IFRS, creating significant technical, logistical and market communications challenges for European insurer.

Articles launched July 2010

Guide to undertaking QIS5
The fifth Quantitative Impact Study (QIS5) provides a last chance to gauge the likely capital requirements and balance sheet impact of using the Solvency II European Standard Formula. Are you prepared?

Risk appetite: A key management tool looks at how Solvency II requires insurers to align their risk taking with a clearly articulated risk appetite. This is an opportunity to turn risk appetite from a conceptual nicety into a practical and valuable management tool.

Articles launched June 2010

Where's the benefit? Effective communication in a Solvency II world
Rather than strengthening risk and capital disclosure, Solvency II could lead to a reporting overload. How can insurers strike a balance between meeting regulatory expectations and providing information that would help them to convey the true strength and potential of the business?

Industrialising Solvency II: Delivering sustainable business benefits
Early steps to integrate Solvency II into business as usual will be crucial in reducing compliance costs and realising the competitive benefits. How can insurers lay the foundations for sustainable 'industrialised' implementation?

Articles launched May 2010

The forgotten pillar: Time to bring disclosure onto the radar draws attention to the wide-ranging challenges represented by pillar 3 qualitative and quantitative reporting requirements.

Worth using: Meeting the use test for model approval focuses on the need for companies to convince regulators that senior management understands, trusts and takes appropriate account of model outputs within its key decisions.

Shaping up: Solvency II and M&A explores the possible commercial and practical implications of Solvency II and how it might change the shape of the industry.

Articles launched February 2010

Risk management framework: What's that really all about?
Solvency II requires insurers to put in place an effective risk management framework. But what does that actually mean in practice and what are the biggest challenges?

Model approval: Preparing a convincing case
With the internal model approval process (IMAP) likely to be a learning curve for both supervisors and applicants, what practical steps can companies take to make a convincing case?

Data quality: Don't leave it until last!
With so much of the Solvency II implementation project resting on the quality of the data, now is the time to make data a priority and get preparations on track.