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With the ever increasing cost of Pillar 3 reporting, this article estimates the growing effort required to comply with annual reporting. As a trusted advisor to insurers in Ireland and the UK, I would also like to inform you of a proven solution that reduces the workload and streamlines the costs associated with regulatory reporting.

Quantitative Reporting Templates (QRTs)

 

 

 

 

Although Solvency II is already live, the real test of insurers’ regulatory reporting processes and solutions will be in meeting the annual reporting requirements due 20th May 2017. Reporting the annual QRTs under Solvency II Pillar 3 is going to be far more onerous than the quarterly QRTs due to the following reasons:

  • There may be up to 90 annual solo QRTs that need to be reported, depending on the type of business the insurer is involved in. In contrast, the maximum number of quarterly solo QRTs required is 13.
  • A lot more detail is required in the annual QRTs.
  • Some facts to be reported in the annual QRTs are multi-dimensional and each fact could be assigned several characteristics, thus increasing the complexity further.

Data points

 

 


The number of facts to be reported annually is a lot more significant and could even grow in the years to come. BearingPoint estimates roughly 18,400 data points are required in annual reporting compared to 1,500 in quarterly reporting.

The aggregation of all facts collected also requires a high level of standardisation of the description of each and every piece of data.

Validation rules

 

 

 


There are six times as many validation rules required for the annual QRTs as the quarterly QRTs.

Validation complexities increase as facts are inserted in a web of cross QRT relationships that must be consistent with one another.

Further workload impacts to expect:

  • If an insurer has more than one solo entity, more than one line of business, or some ring-fenced funds, for example, the number of facts to report and related workload is substantially increased. Furthermore, the reporting framework is complex with many hierarchies and rules governing the data structure.
  • Assigning the necessary internal headcount in the company so as to be able to cope with the multi-faceted burden of annual reporting will present challenges. Not only do insurers have to meet the ongoing quarterly regulatory requirements whilst getting ready for the 2017 annual reporting but they also have to anticipate future evolutions of the regulation.
  • Insurers need to move to an industrialised and efficient reporting process if they want to be in a good position to meet their reporting obligations. As a result, not many are 100% ready to automate the production of the whole set of expected reporting templates. However the additional workload for the annual QRTs is going to make this process even more difficult.  
  • Many insurers will be aware of the additional workload but may face budgetary restrictions or they may be struggling to maintain/grow the internal Solvency II team or even get the right external resources in. Resourcing constraints can lead to increased pressure with deadlines approaching.
  •  Insurers need also to allow for a changing business landscape with new products and services being implemented down the line.

Our team of Solvency II consultants in Dublin, backed by our award winning Solvency II Pillar 3 regulatory reporting solution – ABACUS/Solvency II – are helping our clients to ensure compliance, reduce the cost of regulation as well as the risk of the onerous annual and quarterly reporting. Our clients recognised that regulatory operations and specifically Pillar 3 reporting are a non-competitive differentiator so partnered with BearingPoint to effectively outsource Pillar 3 reporting. To reduce the regulatory burden on insurers, BearingPoint offers a combination of regulatory reporting consulting with a proven, reliable, and future-proofed software solution suite and provides services such as regulation as a service (RaaS), regulatory factories, and onsite training. As part of its regulatory maintenance service, BearingPoint provides ongoing updates in line with changing regulations to enable our clients to comply with all of the Central Bank of Ireland’s requirements and comply rapidly with ever-changing requirements.

With more than 20 years experience in regulation BearingPoint assists financial institutions, regulators and central banks to increase the efficiency of regulatory reporting and associated data management. BearingPoint’s RegTech products and services are trusted by over 4,400 firms worldwide.