European insurers that use third-party fund managers have several challenges to face in order to meet the deadline for Solvency II regulations of 1 January 2014.
Four-fifths of insurers in a survey about the readiness of insurance companies said they were highly dependent on external fund managers for certain data.
Solvency II has challenged insurers to create new data traceability processes and additional data governance. These factors, along with new criteria for mandate reporting, were all identified in the survey as being of critical importance to insurers, according to Maxime Gibault, head of insurance companies at BNP Paribas Securities Services (BNPPSS), which carried out the survey with InteDelt.
“Yet, each of these appears challenging for some insurers that hold assets with third-party managers, or those that hold externally-pooled funds requiring look-through reporting,” Gibault said.
The drive to adapt to Solvency II is forcing insurers to depend more on external agencies and data providers. The survey found that 57% of insurers are significantly dependent on third parties for risk modelling and other data requirements.
In general, insurers are advanced in preparing the directive’s data requirements (Pillar I) and have begun to tackle risk governance (Pillar II) – but they must still embed these requirements in their businesses.
The survey found also that 60% of insurers have yet to address the directive’s disclosure requirements around public and regulatory reporting (Pillar III).
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