By Tim Edwards, Director, Insurance and Investment Management, PwC
Almost all organisations disbanded their Solvency II project, mostly around a year ago, but in some cases during the first half of 2013. In some cases, they felt they had nearly finished, but mostly because they did not want to commit more time, resource or money given the uncertainty over the implementation date and requirements.
Almost all that previous resource has been redeployed - either contractors who are now elsewhere or internal resource that is working on other projects or has gone back to their day job.
So, how do you manage to remobilise the project? In this blog, we share some thoughts from our discussions with firms across the market.
Key questions for remobilising Solvency II
1. Do you know where you left it? (Has SII got lost down the back of the sofa?)
• Are you able to pick up where you stopped? I.e. the model works, the standard formula processes are in place, pillar 2 is largely complete, so there is just reporting to be developed and final model approval to be obtained.
• Who is now responsible? Are the individuals picking this up fully up to speed or will you need rework and education?
In our experience, many organisations did not close down SII activities in an orderly way, nor transition them into a business-as-usual environment.
2. Are you clear on where you need to get to?
• What does this mean for individuals and key functions?
• How are you able to present this view to the regulator?
• How will you be able to report on progress and present what you have done back to the board?
3. Do you know what still needs to be done?
• Can you identify the gaps, and then consider how you will fill them – who, what, and when. We suggest that you focus on the outputs and what you have to produce by 2016 (and the key steps along the way).
• Don’t forget that the Directive is just a starting point – you should also make sure you identify everything within the “Implementing Measures”, the emerging “Level three” standards, e.g. for ORSA, and also EIOPA’s Preparatory Guidelines. And then work out how you can satisfy them without collapsing the business under the weight of compliance activity.
This could risk leading to a conclusion that a large number of people will be required for a short-term programme. Understandably, and rightly, there is a great deal of reluctance to recreate the large scale projects that were around 2-3 years ago. How can you avoid this?
Even if you don’t have a large project, you do need a clear plan. If you are going to mobilise resources (and rates for key actuarial resources, for example, have recently increased dramatically), you need a plan of what is required, and you need that plan before the start of 2014. It needs to be costed, and resources identified within the business. You have less than 6 weeks to develop that plan.
What should the plan cover?
• Divide the tasks, or gaps, into key workstreams of activity, ideally mirroring your organisational design
• Identify the key outputs for each workstream, when they will be delivered and who is responsible for them, as well as how your internal governance will operate
• Describe the activities and resources that are required to deliver these (not just bodies but levels of skill, expertise and experience).
Finally, using your negotiating skills if necessary, make sure your Solvency II remobilisation is on the agenda for the next Board meeting.
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