Solvency II News: Industry launches Solvency II asset data exchange template

Three investment associations have launched a data exchange template for Solvency II asset data. The initiative aims to help standardise the transfer of data needed for Solvency II SCR calculation and Look-through reporting by creating a common set of definitions and interpretations of the required data fields. The template was developed collaboratively by the Investment Management Association (IMA) in the UK, BVI in Germany and Club AMPERE (sponsored by the French Asset Management Association – AFG) in France. Although use of the template is voluntary, the associations hope it will help to facilitate smoother data exchange between insurers and asset managers. “At each step along the way, the three associations have included their own regulators, and although these regulators cannot endorse [the template] they have all supported this work,” Susan Wright, Senior Adviser, Regulation, IMA, told Solvency II Wire. To reflect the variations of business models, the template looks to identify where fields are required (to complete Solvency II reporting); where they are desirable or optional; and the format of the fields (cells). In a joint press notice the associations said that standardising the format of data exchange should create operational efficiencies, increase the accuracy and reliability of data, and reduce operational risk and cost. Peggy Steffen, Vice President Legal, BVI, told Solvency II Wire that Solvency II would significantly increase the quantity of data managed and exchanged between the many parties involved in the management and administration of insurance assets. “Standardising the format of data exchange requires extensive testing regarding accuracy as well as handling of different interfaces”. The implementation of the template is subject to testing and further coordination with IT system suppliers. A further review of the template is planned for the end of 2014. Concerns about Solvency II asset data requirements were identified in 2011 (Solvency II Wire 20/10/2011).

Origins of the template

According to Ms Wright the template was originally created to assist with the transfer of data between third party administrators (TPAs) who act as administrators for both asset managers and insurers. The template is based on data reporting for the Solvency II Standard Formula. The associations began work independently and joined forces when they became aware of each other’s initiatives.

State of preparation

With only fifteen months remaining before the Solvency II implementation date (1 January 2016) levels of coordination between insurers and asset managers in each member state still remains patchy. According to Alban Jarry, Head of Solvency 2 Program at La Mutuelle Generale and Member of the board of the Club AMPERE, coordination work between asset managers and insurers in France is on going. “Asset managers and insurers are working in common on the analysis of mutual funds, their characteristics and performance. The objective is to be ready for 2016.” Ms Wright said she believes that engagement in the UK is higher than in other parts of Europe, but she notes, “To date the level of testing is maybe not as advanced as would be expected at this stage.

Cost of reference data – a key challenge

A number of challenges remain for the asset management industry. Key among them is a concern about the cost of reference data. Passing reference data from asset managers to insurers is the main sticking point as it involved an additional cost. “Currently, the anticipated cost of the data is very important for the industry,” Mr Jarry said. “It is necessary to resolve this point with providers of market data (on rating and characteristics) and with the European authorities,” he added. These concerns are shared in the UK. Ms Wright noted that there is also “some discomfort” about the amount of information asset managers will have to pass on to insurance clients. A further concern is the level of expectation from insurance clients about completing the templates (QRTs and specifically templates D1 – List of Assets and D4 – Look-Through). It is not clear if insurers expected this to be done by their asset managers. The template is available on the IMA (pdf) and Club AMPERE (xls) websites.  
update 20.9.2014
Manuela Zweimueller, EIOPA’s Head of Regulations welcomed the initiative. “EIOPA welcomes every initiative of industry to facilitate the reporting under Solvency II and to increase preparedness for the new risk-based supervisory framework in general. Such proactive and responsible attitude is fundamental for restoring the confidence in the financial markets and enhancing consumer protection”. — To subscribe to the Solvency II Wire mailing list for free click here.]]>