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Scyllogis Consulting have been helping customers within the Insurance sector continue to achieve significantly higher levels of business performance from their data management programmes and information systems since 2001. Read how we have worked with some of these customers to achieve significant business results across the world, in our case studies. |
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Insurance organisations today are no more effective at delivering on large-scale data management initiatives than they were 10 years ago. In a recent survey, 70% of the companies said their data management initiatives did not deliver the expected results. That success rate was unchanged from similar surveys conducted in the 1990's. And the environment for data management is only getting more complex.....
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At Scyllogis Consulting all of our consultants have significant experience gained from within the Insurance market. Our people and our culture are our greatest assets. We only select people with relevant experience, intelligence, integrity, passion and the ambition to make a mark and deliver to our Customers the Scyllogis brand values of practical, results based consultancy. Our Consultants are pragmatic and open minded. That is why we deliver solutions that others dont..... Read More
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| Data transparency and Solvency II |
| Tuesday, 14 June 2011 | |
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With Solvency II looming over the industry, the concept of data transparency is being discussed with ever increasing frequency in insurance circles. But what do we mean by this? The definition from the PC Magazine website (www.pcmag.com/encyclopedia) is as follows: Data transparency: 1) The ability to easily access and work with data no matter where they are located or what application created them. 2) The assurance that data being reported are accurate and are coming from the official source. Solvency II places greater demands on an organisation’s systems and processes than ever before, and the ability to easily access data, and to ensure its traceability, forms the very foundations for compliance. Solvency II is based on a 3 pillar approach: Pillar 1 details the Quantitative Requirements, Pillar 2 focuses on Governance and Supervision, and Pillar 3 covers the Disclosure and Transparency requirements. Pillar 2 is less centred around the data than around internal controls, but data transparency is at the very heart of Pillars 1 and 3. Pillar 1 allows a firm to decide whether to use a standard calculation or its own internal model for its Solvency Capital requirement. Repeatedly throughout the articles relating to the calculations and particularly with regard to the internal model, the Solvency II directive states that “Data used …shall be accurate, complete and appropriate.” In choosing the internal model, an organisation is further required to demonstrate that its profits or losses are directly attributable to the model, and must test the model against experience on an annual basis. The FSA discussion paper “DP08/4, Insurance Risk Management, the Path to Solvency II” states: “A firm using an internal model needs to have good data underlying the model and a clear understanding of how far it is able to rely on the data for assessing capital requirements and decision-making.”
Pillar 3 also demands much from the data held by insurer, with obligations for additional public disclosure of information, and requirements for additional reporting to the supervisory agency. This will require greater standardisation of data, as well as increased accuracy and accessibility.
Yet, even with Solvency II just around the corner, the insurance industry seems to struggle with the management of data. The reason is that the platforms, applications and processes used in the insurance industry are as varied as the risks that are insured. Within the industry, one encounters everything from the London Market, where manual processes still pre-dominate to personal lines, where straight-through processing is the norm. Even within a single organisation, it is not uncommon to encounter multiple systems, residing on multiple platforms, performing overlapping functions, and supported by ad hoc manual processes. Bringing this information together into a consistent, comprehensive, and readily accessible format, in a timely fashion, can be a challenge. Solvency II is going to push the industry to overcome this challenge, like it or not. Although this may be difficult and expensive for many firms, the advantages clearly outweigh the disadvantages. In the follow up to the discussion paper mentioned above, the FSA states: “The benefits…[of Solvency II] that were noted included improved competition through transparency and thus consistency in pricing, and the benefits of a more homogenous and robust regime providing more protection of customers.” In addition, the paper goes on to state “…greater transparency and relevant disclosure, coupled with a reduced cost of capital being reflected in premiums, would lead to more innovative products in a more competitive marketplace.” Not only does greater transparency help facilitate stronger and better regulation, it also helps create a stronger, more efficient industry overall. |
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| Last Updated ( Wednesday, 20 July 2011 ) |
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