The Central Bank's Insurance Quarterly Newsletter, published on 22 March, covers regulatory developments at European and domestic level for the first quarter of 2017. Brexit and embedding Solvency II remain a focus for the Central Bank and the development of a data analytics infrastructure from Solvency II returns is highlighted as a key priority for the Insurance Directorate.
In the context of the new Solvency II templates, the Central Bank emphasises a `fit for purpose and right first time' analogy. The Central Bank identified the following areas where data quality in the preparation of regulatory templates could be improved:
» Internal Quality Controls: Using the taxonomy validations as a primary data quality control is insufficient, this is because it only signals the internal consistency of the data across the different templates.
» Governance Reviews: The board or senior management must attest the accuracy of the Solvency II submissions and be able to satisfy themselves that the review processes that they have relied on are sufficiently robust to identify and rectify any reporting or classification errors.
» Systems Testing: System and process risks should be identified, managed and tracked on an operational risk register.
The Central Bank provides the following guidance for preparing the Solvency and Financial Conditions Report (SFCR):
» Depth of Commentary: The level of detail in which a particular issue is described should be sufficient to give the reader a clear appreciation of the firm's perspective on that issue.
» Treatment of Less Relevant Topics: If less detail is provided on a particular topic because it is deemed to be less relevant then this should be explicitly stated to the reader.
» Disclosure of the Governance Process: A clear description of the governance process followed in preparing the SFCR should be included in the SFCR itself.
The first set of Solvency II Annual Returns for reporting period year ended 31 December 2016 are due in May 2017. To assist firms with the submission of their report through the Online Reporting System (ONR), the Central Bank will support External User Acceptance Testing from 17-21 April 2017.