Solvency II is a EU Directive that was created to codify and harmonize EU insurance regulation. Solvency II standardizes and unifies capital, data management and disclosure requirements for insurers in order to protect insurance companies and consumers from risks. Implementing Solvency II standards is a very complex and long process, relying on robust and flexible IT platforms and data management frameworks, allowing optimized data management to provide consistent and quality data about financial risks.
Data traceability is a major component of Solvency II as a risk management legislation. Insurance companies need a solid IT infrastructure to be able to produce accurate risk calculations and reports.
Solvency II framework has three main pillars:
- Quantitative requirements such as solvency capital and minimum capital requirement,
- Requirements for risk management and supervisory activities for insurers,
- Disclosure and greater transparency requirements: financial condition reporting, available publicly, and supervisory private reports.
Solvency II became effective in January 2016 and completely transformed the insurance industry. In spite of the fact that it has been largely criticized for its complexity, Solvency II gave a good opportunity for insurance companies to prove that they understand their own risks and are able to anticipate them.
Being Solvency 2 compliant means saving time and money by implementing the Solvency 2 standard model for capital risks calculation.
To learn more about the way ActiveEon helps its customers implement Solvency II Directive, you can request our free Customer Case.