Automated Documentation to Meet Technical Actuarial Standards and FSA External Review / Data Audit

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According to the FSA’s 2011 IMAP review, data management is the most problematic area for insurance companies to achieve Solvency II requirements, with many companies over-estimating their level of preparedness. Good practice in the FSA External Review / Data Audit is identified as including:

  • A documented validation policy that explains all the processes used to validate the internal model, including a systematic approach to identifying points (such as data and assumptions) where validation is required

  • Evidence of data management, structure and quality controls, including tracking the contribution of expert judgement

  • Dedicated resources and governance to manage data with individual process and system owners, supplemented by data experts distributed in the firm.

Many of these requirements are already embedded within the standards documentation issued by the Board of Actuarial Standards (part of the UK Financial Reporting Council), particularly Technical Actuarial Standards M: Modelling.

In meeting these standards and regulatory requirements, it is clear that considerable pressure will fall on your most experienced and expensive business resources. For the information that resides in central applications and databases, controls can at least be implemented as a ‘one-off’ cost and staff can return to their day job.

The challenge becomes much harder where information is retained and manipulated in unstructured locations, such as spreadsheets, CSVs and Access databases. Even after taking resources from the business to document and control the current state of these files, the reality is that making the environment sustainable (i.e. maintaining these controls, particularly as the business changes) will prove to be a continuous and expensive challenge.

ClusterSeven provides a fast, automated solution to these problems. Within a few hours of processing you will be able to demonstrate documentation that would have taken months to achieve using conventional manually-oriented approaches. And within days you will have a cost-effective, adaptable control platform for the future.

Print Version

“Part of our financial close process used to take hours, now it takes minutes”

Financial controller, Global insurer (ClusterSeven client)

“This is the first time I can show the rest of the business how it all works. ”

Head of Actuarial, Lloyds managing agent (ClusterSeven client)

“We will use data dictionary terms within our spreadsheets and then automatically upload validated information into our corporate BI solution.”

UK General Insurer (ClusterSeven client)

“In many firms, spreadsheets provide a key area of risk, because they are typically not owned by IT, but by other business or control areas, such as the actuarial function. They may not be subject to the same general IT controls as the firm’s formal IT systems (e.g. change controls, disaster recovery planning, security etc) and firms need to develop a control system around this.”

FSA, 2011