Surviving the current financial market turmoil and the resulting economic downturn may be a critical concern for many firms over the coming year, but implementing Solvency 2  is now the key strategic challenge for all EU-based insurers, and it will be remain of critical importance over the coming four years.

As detailed requirements and supervisory guidelines continue to be hammered out, there’s little doubt that they will evolve to take account of lessons learned during the turmoil. We can expect the emphasis to shift in a number of areas, with increased focus on the quality of risk governance at enterprise level down to the level of each business line. Insurers that have concentrated on implementing economic capital models will need to allocate more resources to measuring tail risks through stress testing, and addressing areas like operational risk that are not well covered by existing models.

We draw on many years’ experience of handling major regulatory projects at financial institutions, including banks, insurers and investment firms. Based on our experience, we now offer a wide range of regulatory compliance and reporting services. These include:

• Performing feasibility studies to assess the impact of new regulations on an organisation’s current capabilities, and identify those areas where change is required using our proprietary Integrated Risk and Performance Measurement (IRPM)^TM tool;
• Supporting mobilisation of regulatory change programmes, from requirements assessment and gap analysis through to programme design and planning;
• Managing the implementation of changes;
• Re-designing and optimising processes and data flows in risk management and finance functions;
• Scrutinising regulatory programmes for improved return on investment – developing return on investment calculators, and defining actions to maximise return on investments;
• Supporting change management programmes with training and educational support to reduce new technology adoption times and promote awareness of new policies, processes and frameworks;
• Validating existing reports (and reporting infrastructure) against operational and regulatory requirements.

Our view on the key challenges faced by insurance firms – from multi-national insurance groups through to Lloyds syndicates – is based on discussions with clients and industry bodies, and on feedback from studies such as QIS4. For a summary of our findings, see our practice note How ready is the Insurance Industry for Solvency 2?

Case study

Basel II Subject Matter Expertise;

Credit Risk Model Validation;

Risk Mitigation Framework;

European Finance Sector Regulatory Reference Guide;

Economic Capital Project Support;

Solvency 2 project mobilisation;

Preparation for FSA Thematic and ARROW Reviews;

Review and audit of systems and contorols over the Direct Sales Force;

Group Compliance;

Solvency II Programme mobilisation;

Conduct Risk Strategy Implementation