Solvency II May Require System Replacements or Upgrades

For European insurers, Solvency II remains “highly political and a work in progress surrounded by uncertainties, making it difficult for insurers to prepare,” according to a new report from Celent.

“Solvency II IT Vendor Spectrum: 2012 Edition,” is intended to help insurers comply with the new regulatory framework, which is scheduled for implementation in January 2014, by helping them identify missing IT systems, fill those gaps and facilitate vendor selection.

“Based on our discussions with European insurers, we have noticed that the methodology used to align information systems to meet the new solvency regulation cannot escape the difficult dilemma of prioritizing a best-of-breed solution over the enterprise solution approach.” said Nicolas Michellod, senior analyst with Celent’s Insurance Group and author of the report. “But one argument in favor of the purchase of components or Solvency II solutions is certainly the support IT vendors can offer in terms of adaptation to changes to the regulation.”

The report offers three questions to guide insurers through a self-assessment and find a balance between current IT resources, applications and technology offerings from system providers:

1. How will insurers fill in the gaps in terms of systems?

2. Will they need to outsource some development of required components or features? Will they leverage infrastructure from IT vendors to run calculation or data aggregation processes?

3. How they will assess vendors’ capabilities to help them be in continuous compliance with legislation changes and requirements in the long run?

The report also offers an update on the Solvency II roadmap, and vendor profiles of Solvency II solutions providers, including Aon Benfield, BearingPoint, Effisoft, IBM, Intuitive Collaboration GmbH, Kalido, Kamakura Corporation, Moody’s Analytics, Oracle, SAP AG, SAS Institute, SolveXia Pty Ltd, SunGard, Wipro Ltd, and Wolkers Kluwer Financial Services.