Mastek has voiced a warning to life and insurance companies that they need to improve data consolidation practices ahead of the introduction of Solvency II. This is in order to comply with the increasingly strict regulations that govern the quality of data that organisations use to manage risk.
With the introduction of Solvency II, regulators need to be convinced that businesses have enough capital liquidity to cover the level of risk within the business. However, in order to comply with this requirement, a complete set of appropriate data needs to be on hand to support the accurate calculation of potential exposure. Businesses will therefore need to implement a robust structure that warehouses data effectively, undertake a thorough data analysis and design a flexible IT model that maps information across the organisation. Firms will need to focus on all three of these areas in order to obtain a holistic view of the data that they are using to inform their decisions about risk.
Richard Sansome, senior vice president & head of financial services at Mastek says: “The problem facing many businesses, and life and insurance organisations in particular, is that they often use a number of disparate IT systems to hold business-critical data across many different parts of the company. This makes collating data a complex and time consuming task. While many firms see consolidating data as a daunting challenge, in a good deal of cases this information can actually be drawn together in a very short time, as long as the appropriate technology is in place, and the mandate to tackle this problem is firmly sponsored by the business.
To avoid falling behind other industries, we recommend that life and insurance companies take action now to ensure that all of their data is easily accessible and stored in an auditable way. For example, firms need to be looking at data warehousing as a solution to internal administration pressures, since this approach will ensure that the main source of information is cleaned, transformed, catalogued and readily available for decision making.”
Richard continues: “Today’s insurance market is based on many different kinds of data; everything from handling and dealing through to trading and exchanging sensitive information. However, with about 19 months to go until the introduction of Solvency II, organisations need to have the resources in place to meet new guidelines around data management or find themselves banned from underwriting business for both new and existing customers. Many organisations are still underestimating the resources required to comply with Solvency II, especially as most firms don’t have the tools in place to do this internally. As such, firms will need to begin implementing these processes now in order to ensure that their systems are up to date ahead of the 2014 deadline.”
