• Blog
  • 5 Min Read
  • July 7, 2015

How Did Your Dry Run Go?

There are many approaches to the Solvency II directive. During preparatory phase filings, EU insurers got a chance to test drive some of these approaches, and discover which worked best with their internal needs. For many, a variety of challenges were brought to light as they struggled to create a transparent, measurable, and repeatable process.

Clearwater discussions with EU insurers revealed five key industry-prevalent challenges. We have outlined those challenges below, along with best practice strategies for overcoming them.

Challenge 1: Evolving Regulations

Though the 2016 effective date is quickly approaching, EIOPA continues to publish guidance, clarifications, and other changes to Solvency II regulations. In fact, new proposed guidelines were just published earlier this week. Tracking, interpreting, and implementing this guidance has been a difficult undertaking for insurers to add to their already full list of responsibilities.


With Clearwater, insurers receive templates that incorporate all the latest guidance. The Clearwater solution is backed by experienced accounting and finance professionals who constantly monitor regulatory updates. Clearwater regularly attends EIOPA, PRA, and other industry sponsored events to maintain expertise on the latest guidance.

Challenge 2: Data Availability

Solvency II requires EU insurers to provide new security characteristics and deeper data granularity. While preparing their interim reporting templates for the recent preparatory phase filings, many firms indicated that they were overwhelmed with the task of classifying the numerous Solvency II-specific data points, such as Complementary Identification Codes (CIC), Nomenclature Générale des Activités Économiques dans les Communautés Européennes (NACE), and Legal Entity Identifier (LEI).

Whether manually classifying the security characteristics with an internal team or collecting, reconciling, and normalising the classifications from various asset managers, significant resources were required to complete this exercise. And these are only a subset of the data points required for the 2016 filings, which will include additional security characteristics, such as Infrastructure Investments and Issuer Group LEI.


EU insurers hoping to successfully manage more security characteristic classifications on a tighter deadline are turning to Clearwater. With Clearwater, insurers have access to data on day one, including:

  • CIC
  • NACE
  • LEI
  • Issuer Group LEI
  • Infrastructure Investments
  • Counterparty Name, Group, and Country

Early and accurate data is key to Solvency II compliance, and will remain a challenge as data points and security characteristics are added. Establishing streamlined processes now helps position insurers for future success across all data fields and regulations.

Challenge 3: Data Accuracy

Solvency II data doesn’t just need to be available, it needs to be accurate. While preparing their interim templates, many insurers found that they spent almost as much time reconciling the Solvency II data as they did aggregating it. Even when reporting was provided by a third-party solution, the responsibility of reconciliation still typically landed on insurers’ shoulders.

Validating numbers within and between reports required time, patience, and subject matter expertise. Yet, manual processes inevitably lead to mistakes, and this manual ad hoc reconciliation often led to inaccurate data.


Manual spreadsheet processes can cause many data integrity issues. With the increased data requirements of Solvency II, insurers need to trust that their data is thorough and clean, with no unexpected problems at any stage.

With Clearwater, insurers receive accurate, reconciled, and consistent data on day one. Clearwater’s daily reconciliation ensures that Solvency II data are consistent not only between templates, but also across performance reports, risk analytics, accounting reports, and general ledger entries.

Challenge 4: More Manual Work

Solvency II is pushing investment teams outside of their established processes and creating the need for new reporting tools or work-arounds. Based on our interviews, the majority of insurers utilized employees from their finance, treasury, and accounting departments for Solvency II. These team members already have full-time responsibilities and manage separate systems that share minimal connections or integration. Insurers quickly discovered that bolting a new Solvency II solution to the existing complex network of systems made the process even more complicated. The cumbersome integration usually occurred manually through the use of Excel, a time-consuming and error-prone tool.


With Clearwater, insurers have a single solution for their investment reporting. Clearwater’s accounting, risk, compliance, and performance information is completely integrated, with a flexible reporting output that caters to a variety of stakeholders. This automation allows investment teams to focus on data analysis, instead of data management. As one insurer commented, ‘I had been forced to become a master of excel, rather than a master of finance. With Clearwater, you’ve given me my job back.’

Challenge 5: Upcoming Staff Shortage

While our interviews were centered on dry-run tools and best practices, insurers also often brought up common concern: the impending exodus of temporary staff brought in to help implement the Solvency II process.

These short-term employees were hired for Solvency II implementation, but will be moving on once their contract is complete. This leaves a short-staffed team working through a process that was implemented by employees no longer with the firm. Combine this with tighter deadlines and full implementation requirements, and it is a recipe for potential disaster.


Clearwater enables insurers to effectively and seamlessly scale to changing regulatory requirements. With a client services team that acts as an extension of investment and accounting departments, and a reporting solution that receives monthly product updates and keeps pace with industry needs, Clearwater users always have experts and up-to-date information at their fingertips.

If you are looking to improve your Solvency II process by gaining access to accurate and validated data in the templates you need, when you need it, then you should schedule a demo with Clearwater. Email us at sales@clearwateranalytics.com.