Leveraging Technology to Improve Risk Management: A Solvency II Update

by Nicolas Michellod, January 25, 2010
Product Trends/ Reviews
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Despite recent changes to and criticisms of Solvency II regulation, work around its implementation continues. The Quantitative Impact Study 4 (QIS4) has seen an increase in participation by European insurers, demonstrating that companies are more interested in Solvency II and want to understand its impact on their capital requirements.

In this report, Leveraging Technology to Improve Risk Management: A Solvency II Update, Celent summarizes the recent developments regarding Solvency II implementation, providing specific information about the QIS4 results and examining how to build an efficient risk management framework. This report provides key information for both IT vendors and insurers looking to better understand Solvency II.


“What makes Solvency II complicated for insurers is its horizontal implications within the organization,” says Nicolas Michellod, senior analyst with Celent’s Insurance group and author of the report. “Even the most prepared insurers will have to adjust their IT infrastructures and invest in order to improve their capabilities around risk management, data integration, and reporting.

After reviewing Solvency II’s main elements, this report provides an update about the new set of regulations and the level of preparation required of insurance companies in light of their participation in the QIS4. This report also describes Celent’s view of the risk management framework for insurers, detailing risk management strategy, governance and internal controls, and providing an analysis of risk appetite and corrective actions. The report then describes key IT considerations for insurers and looks at technology as it relates to data sources and models, risk management, and business analytics and integration.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Solvency II Update

4

Getting Ready for Solvency II

8

Building an Efficient Risk Management Framework

11

Leveraging Technology to Improve Risk Management

16

Final Thoughts

21

Leveraging Celent’s Expertise

23

Related Celent Research

24

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