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Solvency ii Compliance Solution |
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Solvency II is a European Union Directive that covers over 30 countries and it is the biggest ever exercise in establishing a single set of rules governing insurer creditworthiness and risk management. An insurance company needs capital in order to be able to take risks from its policyholders. The appropriate amount of capital is determined according to a set of solvency regulatory principles and rules. Solvency II, similar to Basel II, is based on a 3-pillar approach:-
- Pillar I – Specifies the quantitative requirements
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Pillar II - Sets out requirements for the governance and risk management of insurers
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Pillar III - Focuses on disclosure and transparency requirements
American insurers with parent companies in the EU will have to follow Solvency II requirements such as calculating the SCR and MCR, building a risk management framework, developing internal models, conducting an ORSA, and meeting documentation and reporting standards. Along the same lines, US parent companies with European subsidiaries will need to meet Solvency II requirements with respect to those subsidiaries.
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The challenges that any insurance company will face as a part of Solvency II implementation is the total cost of Solvency II compliance. As the 2012 deadline approaches and since the recent global economic crisis has put the spotlight on risk management, insurers realize that Solvency II and its impact on the enterprise-wide decision-making process imply a much more significant transformation for their organization, processes and information technology (IT) systems. There are other regulations apart from Solvency II that insurance companies are required to comply with and it is important to choose the right kind of IT solution that will help managing global regulations.
MetricStream offers a solution that enables insurance companies follow a streamlined approach towards risk and compliance management. The solutions are provided on a centralized platform, allowing insurance organizations to manage all their risk and compliance needs using a single point of reference. The solution offers an integrated approach that improves collaboration across the enterprise, avoids duplication of resources and efforts, and reduces costs. At the same time, it allows independent responsibilities to be assigned to specific individuals, thereby increasing accountability.
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