Solvency II is forcing insurers to critically evaluate their risk management framework and controls across their entire organisation. Implementing it successfully will enable them to be more decisive about the efficient use of capital and potentially take more risk. However, in the past they haven’t grasped the opportunity to realise the benefits presented by large scale reform.
However, in the past, insurers haven't always grasped the opportunity to realise the benefits presented by large scale reform, as they have been hampered by archaic structures, antiquated legacy systems and a risk averse culture.
Solvency II can be used to gain competitive advantage by using it as a catalyst for better business performance. This can be achieved through the consolidation of systems, the introduction of cross-business data storage and the alignment of business processes. This will allow for greater transparency, a quantified analysis of operations and help to reduce cost.
Improved data management and reporting, a key component of Solvency II, will also enable insurers to be more responsive through effective decision making and ultimately improving their use of capital. Examples of the opportunities provided by having a consolidated business data store include better-informed pricing and rating decisions, as well as a greater understanding of claims cost-to-serve versus indemity spend.
In conclusion, insurers need to take advantage of the opportunity to re-align processes, execute rigorous system consolidation and overhaul their approach to data management to ensure flexibility and responsiveness to external factors.
PA works internationally with insurance clients in this area. For more information or to discuss how to make your business fit for the future please contact us now.