Antoine Bourdais, Director of the Banking and Insurance Division at Invoke, discusses the evolution of regulatory reporting and how the focus is moving to the qualitative elements
What are the challenges firms are facing around regulatory reporting?
The industry is facing three distinct challenges at the moment:
- Being on time and fully compliant. Figures presented by Eiopa and other regulators show that they are not receiving 100% of the data on time – there is a minority of firms that are struggling to make the deadlines.
- Having sufficient data quality. In order to improve data quality, companies are trying to "industrialise" their reporting.
- Reducing the cost of regulatory reporting. Firms are finding they need to decrease the expense of reporting both as an ongoing process, and when the firm needs to implement regulatory change.
How might regulatory change in 2018 and beyond impact Solvency II reporting?
One of the challenges will be the evolution of the calculation of the MCR ratio this year – a particular challenge for the actuarial department.
IFRS 17 will also have a significant impact on regulatory reporting. For the actuarial departments, the data they are working with is going to change, and the way firm will have to present financial information will change. Ultimately, of course this will impact regulatory reporting.
Aside from the annual reporting, what will be the other challenges this year?
Today, most firms struggle with narrative reporting, which they complete manually in word processing programs. There is a significant need within the industry for this kind of reporting to be industrialised, and for collaboration around the creation of this reporting to happen more easily and efficiently.
How does your solution help firms with Solvency II reporting?
Our solution evolves with firms' needs – they can start with a tactical solution and then move to a more strategic solution that not only meets their regulatory reporting obligations but also other reporting needs. The solution has evolved to help firms manage the industrialisation of regulatory reporting in parallel with the growing maturity of their Solvency II work.
What industry trends are driving demand for your solution?
Having a strategic approach to regulatory reporting means the business source system is linked directly to the reporting solution – this contributes to improved data quality. Firms are using our solutions to produce improved quantitative reporting and they are currently moving to extend its use to further automate qualitative reporting. They want to industrialise the production of their narrative reports.
We also have clients who are interested in having calculation features that cover their Solvency II Pillar I obligations, in addition to Pillar III reporting. Outside our current client community we also are talking to organisations that are using other software but are interested in switching to Invoke because they can see Invoke could reduce the cost of their regulatory reporting.
How are you planning to evolve your solution to meet industry needs?
Invoke has a number of different projects at the moment. We are launching a new module for clients, as part of our solution, to enable them to create standard configurations for public disclosures, as well as the regulatory reporting they already do.
Invoke has also prepared a standard module for the narrative reporting that firms have to file – it helps firms to industrialise the production of narrative reporting. This is now available.
The third project we are preparing is a new web-based solution for narrative reporting preparation. This will contain a collaborative environment for all of the stakeholders involved in assembling narrative reporting – so they can work together and communicate around the various report elements. This solution is the result of years of research. As well, companies will have a new obligation to produce their annual reports in inline XBRL by 2020, and this new web-based solution will cover that obligation.
Lastly, Invoke is continuing the development of a Pillar I module – clients have asked us for this and we can see there is room for improvement in this area.
We have a lot in development, but Invoke currently provides solutions to 20-25% of the insurance companies in Europe, so we are proactive in terms of providing the solutions our clients expect.