The Solvency II directive provides for an EU-wide, consistent, risk-based approach to determining capital requirements for insurance firms. When fully adopted - by January 2014 - the framework set forth through Solvency II will protect the insurance policy holder from risk of insurance company failure.
The requirements of Solvency II primarily apply to insurance firms domiciled in the European Union. However, the impact is broader - the new regulations also place an indirect burden on those asset management firms which serve insurers. Both insurance companies and their service providers must recognize how the key components of Solvency II will affect them, and must adopt a solid framework for achieving Solvency II compliance. Given the timeline for compliance, underlying infrastructure such as data management and data quality systems must be selected and implemented immediately.
This paper describes the key requirements of Solvency II, and assesses the data management impact for each. Best practices and recommendations for how firms can take a strategic approach to Solvency II are provided, to enable asset managers to turn compliance into a source of competitive advantage.