Representation, Reality and the Solvency II Data Challenge

Dean Buckner

The European Solvency II directive¹¹ For further details, see European Parliament and the Council of the European Union (2009). for insurance and reinsurance was one of the first regulatory regimes to introduce explicit requirements for data quality. Article 121 of the directive stated that data used for an internal capital model should be “accurate, complete and appropriate”. Later, the European Insurance and Occupational Pensions Authority (EIOPA) guidelines provided high-level principles for data governance, such as implementing and maintaining a data policy and compiling a data directory, specifying the “source, characteristics and usage” of the data.²² For further details, see EIOPA (2013).

Since the original directive was published in 2009, the insurance industry has grappled with the problem of imposing systems of data governance. This has been partly due to the generic and high-level nature of the directive requirements and the associated guidelines, and the subsequent need to interpret these in different ways. However, it has also been partly due to confusion surrounding the idea of data governance itself. This chapter will explore some of the common confusions