The end of June 2015 marks a number of things.
Firstly, the longest days of the year fall around this time, so hopefully there’s plenty of time to enjoy some summer sunshine.
Secondly, it’s the halfway point in the year. And for many financial services businesses, this means the end of the first half of the business year; time to take stock of how the business has performed in what we like to call “H1”.
But there’s one other reason why, particularly this year, the end of June is important.
And that’s because the introduction of the new Solvency II regime for insurers is only six months away.
Yes, that’s right. Six months. In fact it’s quite scary when you say it like that. Especially as for many insurers, there may still be an awful lot of work to do.
Are you ready?
The insurance industry is probably now looking at entering its final phase of preparations for Solvency II – the phase where, as a concept, Solvency II moves out of being a project, and becomes business as usual.
In fact, some of this is likely to have started already, as the first round of reporting to the PRA is now very close indeed.
So for those functions heavily involved in preparing the deliverables against the three pillars of Solvency II, there may not be much change – they just need to press on with what they’re doing.
But the time is drawing near now when all the other functions in the business need to understand what Solvency II is, and what it means for them.
That’s because, in effect, from 1 January, Solvency II becomes business as usual. And in that sense, it affects everyone.
We’re all in
Of course, in order to make sure that everyone in the business understands what Solvency II is, then a degree of training is required, whether through attendance at training events or through the delivery of in-house solutions.
But there are some differences this time about the way in which industry training should be delivered.
Are we all actuaries now?
Unlike many training programmes in the financial services industry, it’s very hard to explain what Solvency II means without going into a reasonable degree of detail about how it impacts on the capital position of the insurer.
Because, when you strip Solvency II back to its bare essentials, what you will have is ultimately, a difference between two capital numbers. One pre-Solvency II and the other post.
And hopefully, for many insurers, the latter figure will be lower than the former one.
Indeed, that would line up with the overall intention of the Directive – that capital is much more aligned to the risk profile of the firm, and the strength of its risk controls.
But how do you explain that to someone who has absolutely nothing to do with risk and actuarial work, and knows nothing about capital?
The reality is – there are financial services training providers who can deliver this – either in the form of training events or bespoke in–house training.
And take it from me, as someone who knew next to nothing about capital and how it all works up until fairly recently – it is possible. We can all understand it with the right training. Whilst we may not all become actuaries as the rather tongue-in-cheek heading suggests, at least everyone can have a good working knowledge of capital management.
And that’s important.
Time to get involved
The other important component of Solvency II is that firms running projects will no doubt be looking to run these down and hand tasks and documents over to business as usual owners.
In which case, those business owners had better make sure that they understand what this will mean for them. And that means understanding Solvency II – with training if necessary.
This is likely to be a bigger piece of work than you might first think, because Solvency II isn’t just about crunching the numbers.
Firstly, there’s the ownership of all the regulatory documents that have led up to the implementation of Solvency II – where will these be kept, and who will be responsible for tracking future regulatory developments after the start of next year? No doubt there will be more to come.
Secondly, there’s the whole issue of the System of Governance as required by the Directive. Who is going to own and maintain all of the policies that need to be drafted? Who is responsible for ensuring that Key Function Holders have been correctly identified? Who will take care of the ongoing governance around the whole process, including ownership of the Governance Map?
Then, there’s the ongoing reporting. Who has oversight of this? Who will maintain the reporting calendar and schedule? Who will identify new reporting requirements as they emerge?
Time for training
To wrap all this up, this is the key period for insurers to ensure that not only the Solvency II deliverables are met, but the rest of the business is ready to play its part.
But these people won’t be able to play that part fully without training. And those training needs could vary.
Whether it’s accountants and auditors who need to understand the changes in accounting practices or whether it’s front-line business teams who need to know just what Solvency II is all about, financial services training providers are gearing up to provide courses designed to meet these needs. In fact, over the next couple of months, you could well see a number of training opportunities designed to cater for that last minute dash to the flag.
And if you want to find out about these Solvency II training opportunities, like all other financial services training events and opportunities, you should start your search with Industry Events Online.
By Martyn Oughton a Professional Member of the International Compliance Association (ICA). Martyn now writes a regular blog for Industry Events Online focusing on the importance of training in all aspects of compliance. Read Martyn's other publications at Martyn's Writers' Residence website.
To keep up to speed with new events and blog posts sign up to the Industry Events Online weekly newsletter.