Computer hardware manufacturer IBM recently announced it has entered into an agreement with the insurance arm of one UK personal and business bank account provider to aid in its preparation for the approaching European Solvency II legislative scheme.
HSBC Insurance UK has partnered with IBM in order to prepare for Solvency II, which has been enacted to provide stronger protection for all insurance policy holders. HSBC will be assisted by IBM in the development and implementation of a business analysis solution in order to provide advanced analytic insights of the risk management data of the insurance firm, which will enable the efficient allocation of working capital to cover business risks.
The European Union’s new regulatory directive that requires insurance providers to implement new financial risk management standards by the end of 2012, Solvency II’s objective is to make sure that insurers understand the inherent risks in their business and sufficiently allocate the required capital to ensure coverage of those risks. Insurers can either come to an agreement with their regulator to use a standardised formula or work to create their own partial or full internal model to meet the new requirements for capital adequacy.
IBM has agreed to suport HSBC by creating a data analytics and management model in order to ensure the banking giant’s insurance arm complies with the requirements of Solvency II. Designed to deliver advanced risk management capabilities to the insurer, the solution will provide storage for the solvency and risk modelling data for HSBC and will also allow the provider to demonstrate traceability, availability, and quality of all key data and any reporting associated with it.
When asked for a comment, IBM Global Business Services’s UK insurance business solutions partner John Smith stated that risk management is one of the most crucial missions of any financial institution.