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EIOPA has published its final guidelines for the phasing-in of the Solvency II regime, with the regulations announced to come into force on 1^st January 2016. Prior to that date, European insurers have two other deadlines to meet:

• A pre-application to the relevant regulator must be submitted in or around September 2014
• A full application to the relevant regulator must be submitted by 1^st June 2015

Insurers should take two actions now in order to meet those deadlines and ensure full Solvency II compliance by January 2016: Action #1: Ensure Data is Always “Complete, Accurate and Appropriate” While many insurers are focused on getting their risk and capital calculation models right, those who have already started the Solvency II application process will know that the main barrier to achieving compliance lies in managing the source data. Whether applying for a Standard Formula, partial internal model or full internal model approach, all insurers must be able to demonstrate that the data used to conduct their economic capital calculations is, in EIOPA’s words, complete, accurate and appropriate. These three words are easily said, but in practice they take a huge effort to achieve. Data is locked up in disparate systems, in emails and spreadsheets, in paper archives, and even inside employees’ heads. Experience has shown it can take a year or more to properly conduct the necessary exercises:

• Identify all of the systems (digital and physical) where the data resides
• Locate all of the required data within those systems
• Digitise any data that is held in a physical format
• Assign the data to its correct Solvency II classification (which may be different from its internal or local regulatory classification)
• Standardise the data (e.g. taxonomy, currency, date formats) for consumption by one or more risk calculation engines
• Validate all of the data prior to running the calculations
• Ensure data can always be collected, validated and processed in time to meet Solvency II reporting deadlines

As a one-off exercise, this is extremely resource-intensive. Going through the same steps every quarter, to get complete, accurate and adequate data for 60+ QRTs, will actively damage business efficiency and effectiveness. RECOMMENDED ACTION:  Act now to get the data collection and validation process as automated and repeatable as possible. Ensure that the new process or framework is substantially in place by the pre-application deadline of September 2014. BUSINESS BENEFITS OF ACTION #1:  To ensure data is complete, accurate and appropriate will help you through pre-application and application with confidence and will allow you to keep that confidence for the years to come. Action #2 Automate, Integrate and Embed Solvency II Reporting By focusing on the model for calculating minimum and solvency capital requirements, many insurers are treating Pillars II and III of Solvency II as an afterthought.  Yet the ability to disseminate and act on the results of the economic capital calculations is a critical element of the new regulations. Reporting to the regulator is just one part of it: insurers also need to be able to view and discuss the results internally in order to take the appropriate risk management actions and make appropriate business decisions. To be truly effective, regulatory reporting and internal risk management must be based on the same (complete, accurate and appropriate) data and the same view of risk. That means making reporting an integral part of an automated Solvency II framework that starts with data gathering and validation and progresses to conducting the economical capital calculations. Once the calculations are complete, the framework should automatically create reports in the appropriate formats for both internal (risk management) and external (Solvency II reporting) use. In the case of regulatory Solvency II reporting, the ability to automatically populate QRTs and ORSA templates will significantly reduce the amount of work required at quarter-end and year-end to produce the required documentation. In the case of internal risk reporting, publishing reports to a central portal can ensure that everyone who needs to use them can have timely access to them. RECOMMENDED ACTION: Embed external and internal reporting into the Solvency II framework; explore ways of automatically populating quantitative (and even qualitative) reports and centrally publishing internal reports for risk management purposes. BUSINESS BENEFITS OF ACTION #2:  Reduced amount of required work leaves time to analyse and act based on trusted reports. Additionally it creates room to maneuver. eFrame® from SecondFloor Can Help Time is tight to get a Solvency II framework in place and approved, but SecondFloor can help. Our eFrame® solution has been developed in close collaboration with the European insurance industry and provides better decisions based on trusted reports.  It is end-to-end, automated and repeatable solution for Solvency II data management, data governance and reporting. It’s already in use at major insurers across Europe to accelerate and embed Solvency II compliance, and is proven to reduce Solvency II project timescales by months. Do you want to comply with Solvency II regulation efficiently and painless and avoid sleepless night? Contact SecondFloor today. For more information contact SecondFloor on +31 (0)20 6589 700 email SecondFloor  at info@secondfloor.com or visit visit SecondFloor website at www.secondfloor.com/solutions-overivew    About SecondFloor SecondFloor helps firms to comply and produce regulatory information efficiently, consistently. Companies that turn to SecondFloor’ solutions benefit from timely, complete, accurate, traceable, auditable and repeatable reports and analytics. Facilitating stress testing, economic capital calculations, and regulatory reporting in complex environments are key elements of SecondFloor’s credentials that have established it as a successful enabler of business analytics. www.secondfloor.com]]>