eFrame® for Insurance Solvency II Standard Formula AutomAted, repeAtAble reporting for Solvency ii StAndArd formulA

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eFrame® for Insurance Solvency II Standard Formula AutomAted, repeAtAble reporting for Solvency ii StAndArd formulA

Benefits of choosing the standard formulaMany insurers have chosen to use

the Standard Formula for Solvency II reporting, believing – rightly – that it is simpler and quicker than building an Internal Model and seeking regulatory approval for it.

The standard formula sets out the required data and economic capital calculations for common risk types, and disclosure is via a standard report format. For less complex businesses, it’s a less onerous approach – and any resulting increase in capital requirement can often be offset against the relatively low cost of implementing the standard formula. Insurers adopting the internal model approach might also implement the standard formula for comparison purposes.

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Standard formula implementation challengesHowever, when it comes to

implementation, many organisations find that the standard formula is not as simple as it might seem. Setting up the reporting process reveals a number of technical and business challenges, such as:

• Datacollection – the data needed to perform the calculations and populate the final report is fragmented across the business, making it difficult to collect, validate and reconcile

• Missingdata – many insurers find that certain data required by the regulator is missing altogether, or at least not available in a machine-readable format

• Inconsistency – in larger firms particularly, data is categorised in different ways and given different labels in different parts of the business, with no standard definitions for key terms

• ITcosts – the cost of implementing some technology solutions, such as a firm-wide data warehouse or GRC application suite, can be significant

• Manualeffort– a huge amount of time and effort can be spent in locating, collecting, validating and reconciling the relevant data, taking valuable resources away from the business

• Processbottlenecks – when data for Solvency II is being collected, calculated or reconciled manually, there is s a risk of bottlenecks occurring if one part of the process is held up

• Repeatability – the production of a standard formula report tends to be a manual effort, with no automated process for ensuring it’s done the same way every time

• Timeconstraints – producing a standard formula report manually can take weeks of effort, making it hard to meet Solvency II reporting deadlines (typically 3-4 weeks after quarter end)

• Lackoftrust– when there’s no standardised process underpinning the creation of the report, senior management are less likely to trust it as an internal tool for risk management

eFrame®For InsuranceSolvency II Standard Formula

PROCESSCONTROL &

AUDITABILITY

TIME WINDOW DRIVEN

REPORTING

Actuals vs Appetite

Calculators

ORSA

MCEV

DFA

Capital calculation

SCR/MCR

QRT

RSR/SFCR

Capital

Liquidity

Reporting

Calculators

Cash Flows & RP

Scenarios/Risk factors

Solvency II parameters

Narratives

Data

Premiums, Claims, Expenses

Assets

Operational losses

Financial data

Data

ESG

Consolidation, Solvency II Balance Sheet

An automated, repeatable and auditable solution for standard formula reporting

eFrame® for Insurance Solvency II Standard Formula is a solution that orchestrates the collection of data and calculations for Solvency II reporting, introduces governance and workflow to ensure accurate reports are produced on time, and provides a full audit trail for all aspects of the report production.

Using the solution, insurers can accelerate Solvency II implementations and embed standard formula reporting as an efficient, controlled process at solo and group levels.

FeaturesThe solution is highly configurable and tailored to reflect the specific processes, organisational structure and lines of business of an organisation. It can handle multiple reporting environments and has built-in workflow and governance to orchestrate the reporting of Life, P&C, Market, Credit and Operational risks for Solvency II and internal risk management.

• Enterprisevisualisation – discovers and maps the processes, organisational hierarchies, systems and data sources inherent in an organisation today, to provide a start point for Solvency II programme planning

• Taxonomy-drivendatamodelling – creates a data model with standard, firm-wide definitions and classifications for every data point required for the quantitative reporting templates (QRTs)

• Workflow – sets up responsibilities and a process flow for supplying and validating data for standard formula reports. Email alerts and escalations ensure data is supplied and validated in a timely way

• SolvencyIItemplates – uses pre-built templates to accelerate standard formula setup and report submission, including a ready-made environment for Risk QRT reporting and the QIS model

• Integrationwithexistingsystems – imports data automatically from finance, modelling, risk and compliance applications, including spreadsheets

• TimeWindow-DrivenReporting™ – one click in eFrame® triggers the process to generate a complete standard formula report within a specified timeframe (typically 3-4 weeks after quarter end)

• Fullaudittrail– preserves a record of every action taken to create a report, every calculation made in the production of the figures, and every source system supplying the underlying data

eFrame® works with a firm’s existing systems to create a repeatable, auditable process for standard formula reporting

BenefitseFrame®forInsuranceSolvencyIIStandardFormulais an elegant solution to Solvency II reporting challenges.

Creating an automated process for standard formula reporting delivers significant business benefits for large and small insurers alike:

• Managecomplexreportingdemands – by establishing a dependable reporting process that works across multiple reporting cycles, reporting approaches, business hierarchies, geographies and supervisory jurisdictions

• Meetchallengingreportingdeadlines– SecondFloor’s Time Window-Driven Reporting™ methodology ensures standard formula reports are completed, validated and submitted within the regulator’s deadlines

• Reducethecostandeffortofcompliance – by automating much of the data collection process and automatically prompting individuals to fill any gaps, with guidance on what data to provide

• Ensuregoodgovernance – by creating a standard, documented reporting process for Solvency II Standard Formula, with a full audit trail and traceability for every data point supplied and every action carried out in the production of the report

• Improveinternalriskmanagement – by creating trustworthy, auditable, repeatable reports and risk intelligence that can be used to guide internal decision-making about risk appetite and risk mitigation

Chosen by leading insurerseFrame® is being used for Solvency II preparation and reporting by some of Europe’s leading multi-country insurers.

Implementation processAll eFrame® implementations can be carried out by experienced SecondFloor consultants on a fixed-price, fixed-date and fixed-content basis. Contact us on info@secondfloor.com to request a demonstration or to discuss your particular requirements.

Find out moreTo learn more about how eFrame® can help you to standardise, automate and accelerate your reporting processes,

contact us on +31 (0)20 6589 700,

email us at info@secondfloor.com,

or visit our website at www.secondfloor.com

Keyfeatures• Automation and workflow

• Data governance and validation

• Audit trail

Keybenefits• Reporting deadlines met, everytime

• Efficient compliance

• Trusted reports

For more details please contact SecondFloor.

AboutSecondFloorSecondFloor helps firms to comply and produce regulatory information efficiently, consistently. Companies that turn to SecondFloor’ solutions benefit from timely, complete, accurate, traceable, auditable and repeatable reports and analytics. Facilitating stress testing, economic capital calculations, and regulatory reporting in complex environments are key elements of SecondFloor’s credentials that have established it as a successful enabler of business analytics. eFrame®, SecondFloor’s software application, reflects best practice approaches and project accelerators learned with clients during years of experience. SecondFloor is also an IBM risk analytics reseller.

RequestafulldemonstrationWould you like to have a personalized demonstration of the eFrame® for Insurance Solvency II Standard Formula? Please contact us at info@secondfloor.com or simply visit www.secondfloor.com