Though Less Exposed to Risks, Solvency Reporting is More Important During Pandemic.
Solvency reporting can get very complicated very quickly. Especially amidst the Covid-19 pandemic, several concerns have been raised about insurance company solvency positions. It has been brought up to the notice of the European Insurance and Occupational Pensions Authority (EIOPA) that analysts have been focusing less on making public disclosures – this can be a recipe for disaster.
EIOPA Updates Its Risk Dashboard
In the wake of this non-disclosure from insurance companies, the EIOPA has updated its Risk Dashboard based on the 2020 Solvency II second-quarter data.
As per the latest Solvency II data, there may not be a lot of risks concerned with solvency reporting for insurance companies as risk exposure for the EU insurance sector has slightly reduced as compared to the last quarter. However, considering the impact of Covid-19 on the related financial markets, the issuers need to comprehend the effect on insurers’ solvency positions. More importantly, they need to understand that this may even threaten the very existence of certain insurance companies.
Importance of Solvency Reporting in the Post Covid-19 Scenario
Covid-19 has disrupted several businesses and sectors all across the EU; the insurance sector is no exception. This has resulted in massive drops in revenues and cash flows. In the post-Covid-19 scenario, this rapid deterioration in profits poses severe risks for insurance companies. In unprecedented times like these, the importance of solvency reporting can be realised, which is why policymakers are promoting companies to keep their financial data up-to-date.
With regards to macro risk, the GDP forecasts for September end show that a strong decline can be expected in the last quarter of 2020, and recovery is expected in the second quarter of 2021. The effects of this second wave of the pandemic may further skew down the GDP. However, the stabilisation of the EU financial market at the end of the third quarter of 2020 may partially ease the challenging situation being faced by EU insurers. In fact, what is to be noted here is that the market and credit risk indicators have stabilised as of September 2020.
So, yes, the market and credit risk indicators may have seemed to stabilise as per the latest reports. However, EU insurance companies need to make sure that their solvency reporting is up-to-date. Omitting or failing to report crucial financial information may lead to inconsistent data for the next quarter, directly impacting the EU insurance sector.
Solvency reporting may not be on your priority list, but it is an unavoidable facet, which is why you need a reputed reporting partner by your side. DataTracks, a leading software solution provider, can help you stay up-to-date with the reporting requirements. With 15+ years of commendable experience in the financial reporting domain, DataTracks can provide you with ideal solutions to keep your solvency reporting worries at bay.
To know more about our services and see DataTracks can help, please speak to an expert @ +44 (20)-3608-1300.