Solvency II touches down!
Solvency II is finally here!
The New Year period really is a strange old mixed bag of emotions. It’s likely that many of us started 2016 with a sore head. Then there are the inevitable resolutions we may or may not keep, the discussions over when to take the Christmas decorations down and maybe even a mild aversion to the thought of returning to work.
But this year, hands up who remembered that New Year’s Day 2016 was also Solvency II Go-Live Day… a few hands at the back… It may not have been our waking thought on 1st January but nevertheless, we are now, finally, in a world where Solvency II is a living, breathing animal and personally, I think this is a good thing.
Yes, Solvency II will present challenges and for some it is perceived as a costly, time-consuming beast with an appetite for resource. But despite all of the delays and alterations to the minutiae of the Directive, we might all be better off now that it is actually here for a number of reasons.
The time and money spent on preparing for something that no one anywhere has any tangible experience working on in a live environment is a significant burden in itself. Now that the Directive is here and we can all start to understand its demands, its rules, the multiple legal implications, the nuances of how it impacts each of us differently and the ways in which the industry on the whole deals with it, we will also be able to build our own working experience of Solvency II and replace speculation with genuine understanding. This in turn will inform resourcing, budgeting and time-keeping.
It is likely that once a recognised process for dealing with your obligations relating to Solvency II has been implemented, it will actually take up less time and effort than the preparation. The first few months may well be a steep learning curve but steep learning curves pretty much always level off and that’s when you begin to feel more at ease with what you’re doing.
Solvency II solutions providers, such as FundsLibrary, will evolve as the Directive takes hold, enabling impacted organisations to become more agile as we automate and simplify more and more of the requirements. Additionally, providers will be able to enhance existing features and add new ones using real-world experience, each time making the process more manageable.
An important part of our collective survival in a Solvency II world will be found in our ability to communicate and collaborate, particularly in the early days. Whilst competition between rival organisations is perfectly healthy and drives us to innovate and expand, it makes sense to unite against a common adversary. In Solvency II we have just that and it may prove to be the unifying force that helps the industry through its toughest challenge yet.
The bottom line is that the industry must learn from its mistakes. There is a chance that not all Fund Groups and Insurers will get Solvency II right first time but anyone who doesn’t certainly won’t be alone and that in itself is a comforting fact. But ultimately we will crack it and when we do it’ll be worth another sore head.
Roll on Solvency III…