Wenzhe joined the Clearwater Analytics team in 2022 and is based in our London office. He has more than a decade of experience in investment operations, accounting, and regulations through his experience at J.P. Morgan and GSI-backed life insurance firms. During this time, he was a working member and directly engaged with UK regulators on key regulatory initiatives, such as UK PRA’s Solvency II reform and the Bank of England’s Transforming Data Collection programme.
As a Senior Product Manager, Wenzhe oversees Clearwater’s UK and EU insurance regulatory product and is an expert in helping our clients navigate through the complex and evolving regulations in Europe.
Solvency II has been in effect since 2016 and required insurers in the EU and UK to perform a major regulatory overhaul. It establishes requirements based on individual insurer’s risk profile by ensuring assets are valued on a fair value basis, as well as harmonising the standard across EU28 (now EU27) and setting higher capital standard, allowing more supervisor monitoring and intervention. As a single, comprehensive, and standardised regulatory rulebook, Solvency II transforms the regulatory requirements regarding organization’s capital, risk management, governance, and disclosure requirements.
While Solvency II brings significant benefits, insurers ought to consider the additional regulatory obligation and data requirement under the new Pillar 1 Capital Calculation and Pillar 3 Disclosure Requirements (read more). Given the post-implementation feedback in recent years, as well as the diverging political landscape and priorities in the EU and UK, regulators are reviewing this rulebook and constantly evolving and diverging regulatory disclosure requirements as a result. We expect the Solvency II review to continue on both sides as the UK and EU27 adapt new strategic partnerships and competitive relationships.
What is happening in the UK
The ongoing debates between the UK Parliament and the PRA, the UK’s regulatory body, have recently caught the public’s attention due to slow progress on important topics. However, in his latest speech in February, Sam Wood, the CEO of PRA said, “we are moving away from debating, and into implementing”. This signals imminent change to the regulatory guidance, such as with capital calculations, disclosures, and reporting all insurers need to be aware of.
Clearwater Analytics closely follows industry news and has experts interpreting the latest consultation papers for our clients, such as the Solvency II Phase II Review (CP14/22) in 2022. We expect the updated policy statement to be announced in the second half of 2023. Clearwater teams are also already reviewing these updates to incorporate them into our client’s regulatory statements, so they don’t need to. Additionally, we are following additional regulatory developments, such as the newly released regulatory yield curve for UK firms to calculate SCR for investments.
What is happening in the EU27
In the EU27, the discussion between members regarding the various implementation challenges and certain elements of the rulebook, such as solvency capital requirements, have been the centre of attention. In late 2020, a review addressed numerous issues that were raised. The technical standard is now in its fine-tuning stage before going into effect later this year for insurers operating in the EU. One important, and well-received update to the guidance was the elimination of reporting requirements such as S.08.02. Clearwater Analytics has also reviewed the latest taxonomy 2.8.0 (released in March 2023) and will review the final version this July (if changes are required) before deploying it in Q4 2023 prior to the regulatory submission timeline for all clients in the EU27.
Clearwater Analytics recommends organizations have a plan in place for future EIOPA updates and continual reviews of Solvency II and new taxonomies in the coming years.
How Clearwater Analytics can help
Clearwater Analytics closely monitors regulatory developments and changes in the EU and UK. We pride ourselves on ensuring our regulatory solution provides the most timely and accurate information to clients every day. With Clearwater, you don’t have to navigate complex regulatory changes alone. Our experts are your first line of defence and are dedicated to capturing new standards and guidance and applying them per your accounting standards and requirements, keeping you up to date with the latest guidance updates.
Check out our eBook on how to best navigate the challenges around Solvency II: Navigating Solvency II
To learn more about how Clearwater’s solution for Solvency II, schedule a meeting with our experts today.
Below is more information on our upcoming annual Clearwater Connect event in London, Clearwater Connect In London
Attendance is free and you can also speak to myself or one of our regulatory expert there directly.