Insurance and reinsurance chief executives and their senior colleagues are concerned – in some cases needlessly – about the state of the systems that underpin their businesses, according to Michael Graham, Director of insurance and reinsurance software specialists Sequel. He believes that one basic test, a first step diagnostic, can help them see how their systems are shaping up.
In what he calls ‘the five o’clock test’, C-level executives should ask, towards the end of the working day: What’s our net position taking into account our gross premiums and claims plus outward premiums and receivables?
“If that key question – which is at the heart of what Solvency II is all about – can’t be answered accurately within the next working day, that’s a call for further investigation,” Graham says. “This is not a case of: ask one question and you’ve got Solvency II sorted - but it is a good first step when you start asking how fit for purpose your system is.
“If you can’t extract the information you need from the data you hold when you need it, your system is not fit for purpose. If you’re going to get meaningful analysis and reporting in a timely way, your data needs to be structured and in one place,” he continues. “For those not currently able to do this, now is just the right time to take action. Companies naturally agonise about change, but it will be better for them if they make an early start on improvements rather than risk an expensive and hectic rush later. While technology has an important role to play here, it cannot, by itself, solve problems – it should be deployed as part of a business-led process.”
Graham concludes: “Now is the time for insurers and reinsurers to take the test. Then, whatever the outcome, they should investigate further and plan accordingly to make sure their companies are ready for Solvency II. And while Solvency II will force insurers and reinsurers to ask much more of their systems, better systems will bring them measurable commercial and business benefits.”
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