150514_Invoke Software_InsuranceERM_Presentation

The impact of regulations

on data infrastructure

Anne Leslie-BiniDirector • Invoke Software

Åke MagnussonPartner at Cavendi

The impact of regulations on data infrastructure

• Building an efficient Solvency II reporting solution - the

necessary groundwork

• Case study on a completed Solvency II XBRL:

Implementation in a Swedish Life Insurance company

– Starting points

– Project timeline

– Technical architecture

– Success factors

Invoke in numbers

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Invoke & Solvency II • Key indicators

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Zoom-in on EIOPA-zone preparatory phase

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2014 • French Regulator (ACPR) XBRL data collection exercise

XBRL data collection


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2015 • XBRL usage by European NCAs


Not decided yet

Alternative data format


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2016 • XBRL usage by European NCAs


Not decided yet

Alternative data format

Beyond 2016: what is at stake for you?

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… and it is now that the final outcome will be decided.

You are embarking on an ultra-marathon…

Why is industrialised reporting no longer optional?

Exponential increaseof reporting requirements

in terms of

volume and frequency


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Additional challenges coming your way

Feedback from 2014 French Pillar 3 dry-run

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A-Students

• In theory

– Insurers who are capable of producing all their

Pillar 3 QRTs in XBRL format using

industrialized reporting systems

• In real life

– Very few, if any, insurers are in this category,

even if it is the target future state for many.

– Impact: far-reaching re-organisation of the

entire reporting and disclosure function.

• Observations

– The insurers who plan the most for the future

are not necessarily those that are the furthest

ahead with their Pillar 3 implementations.

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The idyllic future-state…

In-betweeners

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• In theory

– Insurers who are capable of making a Pillar 3

submission in XBRL format.

• In real life

– Yes…but using processes that are largely

manual.

– Firms are doing their best to industrialise what

can be rationalised and streamlined.

– Impact: segregation and division of the overall

reporting task according to the legacy

landscape.

• Observations

– The most representative description of the

current operational reality.

Half-way to Heaven…

« We don’t care what people say »…

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• In theory

– In 2014 there was no mandatory obligation to

submit Pillar 3 reports in XBRL.

• In real life

– In this category are those insurers that

submitted in some other format (typically

Excel®), or those that completely opted out of

the dry-run exercise.

– Impact: Those who chose not to comply now

find themselves spending a lot of time

explaining why to the regulator.

• Observations

– Most severely underestimate the remaining

effort required for the imminent 2015 and 2016

deadlines.

– Data alone is not sufficient to bridge the

technical gap to XBRL compliance.

Fingers crossed…

Far-sighted and steady wins the race…

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Better test than stress!

Feedback from a successful Pillar 3 dry-run implementation:

The setting

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The company Solvency II IT environment

• Swedbank Insurance AB

• Subsidiary of one of the

major Swedish banks

• Life insurance and risk

productcts

• Approximately 2 million

policy holders

• 150 employees

• Total assets under

management 14 billion

Euros

• A pre-study including all

pillars 2011

• Implementation 2012-

2014

• First ORSA completed

2012

• Compliant with the SII

interim requirements

• IT operations

outsourced to the

Bank:s IT –function

• One policy

administration system

• Business Warehouse

part of the IT-structure

A solution for regulatory reporting is a key component and

must be a good match with the overall solvency solution

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FSAINTERNAL SYSTEMSEXT

DatamartInsurance

system

Accounting

Custody

Unit-Linked

External Market

Data

ABC

Solution Regulatory Reporting

QRT

Finance data

Asset data

Insurance data

MgmtReporting & analysis*

Narrative

Qualitativesupervisory disclosure

Data Warehouse

(ETL flows, Repository, Fact & Dim views)

Calculations data

Cash Flows

Spreadsheets(UDAs)Other data sources

Reporting Policy, Data Quality policy, EUC policy, Reporting processes, DQMS, Documentation

Trad

Swedbank Insurance Pillar III timeline

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FAS Regulatory S2 actual implementation 2014

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SG meeting

Project milestone

April May June July August

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Pre-Preparations

• Contract Sign

Inception

Specification

Implementation

Production

Project Management + Change Management

Acceptance Testing

• Scoping specification• Implementation strategy

• Functional Specification• Technical Specification

• Configuration Kits• Parameterized Software• Primary Testing

• Detailed planning• WS scheduling

• Go-Live validation

• User FunctionalTest Acceptance

• User Technical Test Acceptance

• Final Sign-off document

QRT Reports

SourceSystem

Data type

DW loading

InvokeLoading

Invoke Specific.

FSA Reporting

Mapping information according to classes,

complexity and reporting usage

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Finance data

General Ledger

Asset data Insurance / Calculated data

ABCCalculation

Life Insurance

U/LCustody

U/LFund

Fund look through

CalculationEngine

Insurance AdminPolicy Holder

User Developed Application

BS-C1

BS-C1D Cover - A1A

Country - K1

Cover - A1Q

OF-B1Q

OF-B1A

VA-C2C

Assets – D1

Assets – D3

Assets – D4

SCR - B2A

SCR - B3A

SCR - B3B

SCR - B3C

SCR - B3D

SCR - B3F

SCR - B3G

MCR – B4A

TP - F1

TP – F2

TP – F3

RE-J1

RE-J2

Lapses/Profit

Automated loaded to DW NOT loaded to DW

Geographical import, Excel files dropped at share Invoke/FAS Server by Actuaries

Standard loading to Import share Invoke/FAS Server

Standard loading to Import share Invoke/FAS Server

Drafting, control and validation of reports with Invoke FAS Regulatory S2

Approval, sign-off and disclosure to Swedish Authority (FI) with Invoke e-Regulatory S2 Portal

RE-J3

Automated Solution Semi Automated Work

Finance Actuary

Success factors

• Leveraging existing IT-structure

• Overall well prepared Solvency II program with strong Solvency II focus

– Business value

– High commitment from senior stakeholders and clear sponsor for each pillar

and delivery

• Information Management Strategy focusing on gathering all adequate

Solvency data automatically in a generic business data warehouse based

on an information model developed for the insurance company – not only

for external reporting purposes.

• Postponement of choice of reporting solution until all information has been

gathered and the EIOPA requirements had reached a more stable state,

thus allowing standard reporting tools in the market to mature.

• Strong project management

– Pillar 1-3 knowledge as well as information management skills within the

project management and project team – no project silo

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Different starting points, the same finishing line

• Tactical approaches become progressively strategic

– As data management becomes increasingly industrialised

– As upstream feeder systems mature and stabilise

• The ‘best’ Pillar 3 approach is one that is based on

pragmatic, forward-looking moderation supported by

agile technology

– Ambitious regarding the target future-state

– Mindful of meeting all reporting obligations along the way

– Without requiring a re-build or deviation from the critical path in

the case of inevitable regulatory change

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Enabling sustainable Pillar 3 strategies by embedding agile reporting technology

Invoke Solvency II expertise rewarded

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Contact

• Partner at Cavendi.

• Worked as a management consultant and executive level advisor for

more than 30 years.

• PhD in management accounting from the Stockholm School of

Economics. Between 1996 and 2005 adjunct professor in

management control and accounting at the Stockholm School of

Economics.

• Areas of expertise: management control and performance

measurement, risk management and internal control , design and

implementation of ERP and accounting systems

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Åke Magnusson

[email protected]

Contact

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150514_Invoke Software_InsuranceERM_Presentation

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