Implementing a full Solvency II program is a major undertaking, particularly for multinational insurers and those with complex business structures. While the immediate focus will be to meet the compliance deadline, in the longer term, insurers can and should also look to utilize the Solvency II requirements as a means to deliver significant benefits to the business. In a classic case of turning challenge into opportunity, insurers can gain a better understanding of risk and make more effective use of capital. This can enable more profitable products, efficient reinsurance capabilities, competitive advantage and ultimately, improved shareholder value.
Compliance through Technology
Technology plays a key role in both short-term regulatory compliance and long-term risk-based capital management. To meet the initial requirements, insurers will need to enhance existing desktop and manual systems with modern risk/financial modeling technology that provides the computing power and compliance controls required. However, in the longer term, insurers should look to build a risk and finance platform to replace their existing legacy technology solutions.
Risk and finance consolidation will be essential to provide the consistency and compliance that Solvency II demands, but consolidation will also lower implementation costs. In addition to cost control, insurers will ultimately be able to make more informed business decisions across a range of functions – including strategy development, product pricing, profitability, reinsurance, and performance management.