Tag Archives: QRT

Brief study of UK health insurers’ first SFCRs

Solvency and Financial Condition Reports (SFCRs) contain a number of Quantitative Reporting Templates (QRTs). They are an important source of information on a company’s financial position under Solvency II. This report by Milliman’s Joanne Buckle and Didier Serre compares and contrasts the information in selected QRTs of 13 health insurers in the United Kingdom.

Central Bank shines a light on anomalies in Solvency II Pillar 3 reporting

This blog is part of the Pillar 3 Reporting series. For more blogs in this series click here.

The Central Bank of Ireland (CBI) held an industry workshop on 21 November aimed at practitioners who prepare the Quantitative Reporting Templates (QRTs) and, to a less extent, the Solvency and Financial Condition Report (SFCR). Despite the wet and wintry conditions, the session was very well attended and there was plenty of engagement from industry attendees. The CBI expressed concern regarding the level of errors in the Solvency II submissions, calling into question the processes, review and governance in place in (re)insurance companies.

This blog post outlines some of the highlights from the workshop:

• There has been a surprisingly high rate of resubmissions of quarterly and annual QRTs to date. For Q1 2016, it was as high as 70%. There is now a consistent resubmission rate at approximately 30%.

• The CBI pointed out that it commits significant resources to identifying and querying errors each quarter. In turn companies also spend time and effort remediating these issues. They see this as an unanticipated cost for both themselves and the industry.

• The most common errors relate to missing data on the list of assets template (S.06.02) and confusion around country classification for premiums, claims and expenses (templates S.04.01, S.05.01 and S.05.02).

• The CBI believes it has taken a pragmatic approach to QRT errors for the first 18 months of reporting, working with companies to remediate errors. However, it was clear that it would consider taking a harder line from next year onwards.

• The CBI specifically pointed to the Directors’ Accuracy Certificate, which relates to annual reporting only. In cases of persistent reporting errors by a company, the CBI intends to contact signing directors and may ask them to outline the governance and review processes in place.

• The CBI is carrying out some on-site inspections in relation to Solvency II reporting processes, with a particular focus on governance and review of submissions.

• In addition to the automatic cross-checks on the CBI’s Online Reporting System, it also outlined some of the additional quality assurance checks it carries out on receipt of QRTs. In order to assist companies in this regard, the CBI has prepared a spreadsheet with a list of these checks. It expects companies to build in these checks to their own processes before submitting templates.

• The CBI has also added an SFCR repository to its website. This contains the SFCR reports of insurance companies that are regulated by the CBI and is a useful resource for the industry. The CBI’s SFCR repository can be found here.

As such, a clear message has been sent to the industry regarding Pillar 3 reporting. The challenge will be in automating processes, streamlining review and tightening up the governance in this area.

I include links to both the slides from the industry workshop and the additional quality assurance checks spreadsheet.

Milliman STAR Solutions® – VEGA® is an automated Pillar 3 reporting and standard formula aggregation system. One of the key features of VEGA is inbuilt XBRL functionality and validations, ensuring the QRTs meet the CBI’s requirements before uploading to the Online Reporting System.

Annual QRTs: Getting it right first time, every time

This blog is part of the Pillar 3 Reporting series. For more blogs in this series click here.

Over the next few weeks, companies will be finalising their first sets of annual Quantitative Reporting Templates (QRTs) to be submitted under Solvency II. For companies with a financial year-end of 31 December, the reporting deadline is 20 May 2017.

A key part of preparing the annual (or quarterly) QRTs is ensuring the accuracy of the information provided. In this blog post, we highlight some validation processes available to companies.

In recent speaking engagements and publications, the Central Bank of Ireland (CBI) has underlined the importance of ensuring that the supervisory returns are validated and that there is appropriate governance in place so that the directors, who sign off on the annual QRTs, are satisfied that the returns are accurate and complete. In its recent Insurance Quarterly bulletin, the CBI stated that its ‘experience to date has shown that successfully meeting the dual requirements of “fit for purpose” and “right first time” requires firms to manage much better the governance and operational risks around the reporting process.’

Pressure to put in place a validation and governance process also comes from the board as the annual QRTs must be approved at a board level under the Solvency II text. In addition, in Ireland three named directors are required to submit an accuracy certificate on the annual QRTs. The CBI points out that ‘while those signing off returns may not be the people reviewing them, they should ensure that they have a clear process that they can rely on.’

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