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  • 3 Min Read
  • October 14, 2016

Top 5 Takeaways from Clearwater’s Lloyd’s Investment Reporting Roundtable

Written by:
Georgie Patten, CA(SA)

Solvency II has brought many changes to the investment accounting landscape, inspiring the desire for collaboration and discourse within the insurance and investment management industries. To support this collaboration, Clearwater hosted a Lloyd’s Investment Reporting Roundtable at the Apex Hotel in London to connect those affected by the accounting challenges of Solvency II and provide a platform to explore pervasive pain points and best practices. Many members of the Clearwater community joined for a lively discussion with representatives from Hiscox, Sompo Canopius, and Antares.

The session began with an introductory panel to touch on challenges, and then moved on to a roundtable discussion to discuss reporting updates and what industry leaders are doing to prepare. Here are the top five takeaways from the Lloyd’s Investment Reporting Roundtable and Panel Discussion.

1. Changes to Reporting Drive Investment Decisions

When asked about taking on more Solvency II responsibilities with a tighter budget and timeline, panelists agreed that changes from Solvency II have affected how organizations make investment decisions. With shortened deadlines, complex reporting processes, and difficult derivatives templates, investment accountants struggle with cumbersome manual processes. As a result, newer syndicates are deterred from investing in more complex assets beyond cash and overseas deposits.

Participants emphasized that investment accounting solutions with automated reconciliation, customized reporting, and portfolio transparency enable them to acquire timely data and streamline processes to meet Solvency II reporting standards. This enables organizations to focus on more important tasks like portfolio management, rather than manual data entry.

2. Consolidation and Automation is Key

Panelists from Hiscox, Sompo Canopius, and Antares all agreed that their biggest Solvency II challenges were aggregating a higher volume of data and customizing reports to meet new reporting standards with shorter deadlines. Panelists and audience members described how obtaining timely and accurate data from asset managers can be a challenge, and new data formats from asset managers often differ, complicating reconciliation.

Panelists emphasized that having access to reliable and consistent data on a daily basis was key to producing accurate and timely reports.

3. Submission Validations Are Complex

To solve data validation and reconciliation challenges resulting from Solvency II, many organizations are building out their own validation tools. This method can save time in the short-term but often fails to fully integrate with Lloyd’s, leaving inconsistencies at quarter-end. Solvency II requirements have made it clear that manual workarounds and processes are no longer sufficient, nor are they sustainable, and industry leaders must automate their processes to scale to new workloads.

Panelists remarked that when filing for period-end, automated data reconciliation reduced their manual processes and provided peace-of-mind that their reporting was up-to-date.

4. Everyone Faces Similar Challenges

Many suggestions for improvements to Solvency II processes were discussed during the roundtable. Participants remarked that all parties have not yet found a viable solution for the fund look-through challenge, which has inadvertently forced asset managers to disclose their investment strategies by demanding a more granular level of reporting for pooled investment funds like mutual funds, hedge funds, and securitized products. These challenges resonated for insurers as well, who are adjusting to the increased granularity of Solvency II.

5. Make Your Voice Heard!

It was broadly agreed that insurers should provide timely feedback to Lloyd’s to highlight their Solvency II challenges and hopefully improve processes. Attendees remarked that navigating Solvency II—especially through software bugs, changes to reporting, and uncertainties about data validation—was often difficult and time-consuming. By communicating the issues early, they were more likely to be resolved, and the increased collaboration between industry leaders could result in better solutions for all parties involved.

Attendees suggested that reporting consistency, improved data validation from asset managers, and direct communication with Lloyd’s could help address some of the challenges discussed at the roundtable and panel discussion. Participants encouraged collaboration and communication between Lloyd’s and insurers to look for solutions to pain points and streamline processes.

Clearwater is looking forward to more industry-led discussions in the future. You can read more about how to address the challenges of Solvency II and streamline processes by reading our white paper, Lloyd’s Risk Management: Best Practices for Solvency II Readiness and Seamless Data Accuracy.

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