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Aon Benfield: tackling the post-Solvency II world

Aon Benfield launched its new edition of ReMetrica, ReMetrica Ultimate edition this year. Paul Maitland, head of risk software, talks about the challenges it is seeking to address, all the way from cyber risk to getting value from Solvency II reporting

How has the industry moved on from Solvency II and what current challenges does it face?

Paul MaitlandIn general terms there is a continued maturing of the industry in terms of capital modelling. With Solvency II in place for a couple of years insurers are now looking to get enhanced value out of their software. Companies want to harness the benefits of the reporting process and use this with their business planning, for example. We are committed to making this happen.

For example, ReMetrica has to date been about calculations – the next stage is to help companies step up and improve the management of all processes and calculations.

Certainly one of the legacies of Solvency II is the spread of more sophisticated capital modelling techniques around the globe. Much of this is being led by the UK which is the most sophisticated territory for capital modelling, and we see this continuing in the future.

You released a new edition of ReMetrica this year. What is the aim behind this?

ReMetrica Ultimate edition is aimed at addressing the wider aspects of the modelling process. It is a major advance in ReMetrica’s development. Capital modelling has evolved into a much more sophisticated process and the new edition will better enable this. For one, it allows for team collaborations. You can have many people accessing the same study and model and making changes simultaneously while also seeing who has changed what and when.

We have also put in automation of workflows using a visual, non-programming approach. Companies are running calculations hundreds of times per year, each with different parameters and uses. The new edition allows you to go back to any previous version of the capital model and gives you full audit trails for all model runs.

Whereas ReMetrica supported the calculation kernel, the new edition is now supporting activities around the kernel such as data and report preparation. We hope we are enabling much better risk management and control of process through this. Overall, the new edition is intended to bring an industrialisation to the analytics process and will help people to do the job more easily.

The Ultimate edition should appeal to both smaller and larger-scale users. Ultimate is ideal to enable subsidiaries of large groups to work on capital modelling and see what each is doing. By helping to aggregate calculations from subsidiaries it prevents big errors. Smaller companies are also interested because process and management are what risk managers care about.

IFRS 17 seems to be an important regulatory theme right now. Is it something clients have been asking about?

The advent of the new IFRS 17 accounting standards brings new urgency and new challenges to companies and has heightened the need for risk and capital modelling using sophisticated and robust modelling platforms.

The architecture of ReMetrica enables additional logic to be seamlessly added to existing models so that companies will be able to produce IFRS 17 compliant accounts with minimal investment or disruption.

What are they key emergent risks the industry faces and how are you looking to tackle these?

We are having lots of conversations about cyber right now. From a software perspective, cyber risk is another risk in the portfolio. Technically speaking, it is no more work on a capital modelling basis because we treat it as another risk.

However, things are different in terms of how it is calculated technically. There are many new techniques to be used which differ from other capital modelling risk calculation.

We have used ReMetrica for cyber risk in a platform called CyberMetrica to identify key points of aggregation and develop bespoke scenarios. While ReMetrica helps with the calculation, this approach incorporates consulting too, with the aim being to enhance reinsurance protection as the insurance industry takes on cyber risk as a new source of business.

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