SAM regulations

What are the Solvency and Assessment Management (SAM) regulations?

SAM is a South African directive designed to minimise risk in the insurance industry, by regulating the process used to measure risk.

SAM is based on the European Solvency II regulations that stipulate minimum capital requirements, minimum solvency capital requirements, principles of risk management and assessment, and disclosure requirements. 

Similarly to the banking industries Basel accords, the SAM regulations are represented by “three pillars”:

Pillar 1: Quantitative Requirements (Capital requirements)

SAM Pilllar 1: Quantitative RequirementsPillar 1 is the “balance sheet” of Solvency II, calculating capital and provision requirements against company assets.Clearly, the quality of a company’s data will affect the accuracy and reliability of Solvency II calculations. Given that a company is required to assume the worst with regards to its data, the quality of a company’s data is inversely proportionate to the amounts set aside for capital retention and technical provisions.

Pillar 2: Qualitative Requirements (Risk management and Governance requirements)

SAM Pillar 2Governance requirements for Solvency are stringent, and play a far greater role than in previous directives or legislation.  Simply documenting policies and processes isn’t enough: companies must be able to demonstrate the governance measures that have been implemented, what they are doing to manage risk, and how these measures have been incorporated into, or influence, daily decision-making.

Governance, in this instance, is not the high level policy-related management that many companies are used to; it extends to processes, reporting, organisational structures, and IT systems.

Audits are key to proving compliance, so partially or fully automating as many manually-intensive or low-value processes as possible is sensible.  Unfortunately, automation often translates to “moving garbage through the system more quickly”, as data quality is often overlooked. Effective data governance is critical to avoiding this pitfall, by ensuring that the data meets minimum quality standards at the time of input, and not when it has already been used for major calculations.

Pillar 3: Reporting and Disclosure

SAM Pillar 3Accurate reporting is heavily reliant on the implementation of Pillars 1 and 2: the accuracy and validity of the underlying data models and associated processes are critical to the accuracy of dashboards and reports. Naturally, the quality and management of the underlying data are critical to the accuracy and validity of these data models

 


Data Governance for SAM

The lessons learned from both the banking implemenation of Basel i, II and III, and the European are consistent:

Data Governance plays a critical role in meeting the requirements for Solvency and Assessment management.

Pillar 1: Many insurers will need to increase the details held for each policy, and will need to prove the integrity of this foundational dataused for risk calculations. Data quality rules and policies must be defined at a group level and failures to comply with these policies must be reported to the regulators.

Pillar 2: Requires that risk management and SAM measures are incorporated into company decision making. The requirement for internal models is likely to be more stringent, but allow for the greatest accuracy and savings in holding capital. From a data governance perspective policies must be documented, shared and  linked to supporting data.

Pillar 3: Insurance companies that do not measure, and prove, the quality of the underlying data used for risk modelling may be forced to hold more capital reserves(SCR) than those companies that can prove the accuracy of their risk calculations.

The Leap from Theory to Practise is a large one

Our Data Governance package for SAM allows you to benefit from the experiences gained by a number of international insurance companies. Predefined workflows, policies and artefacts give you a proven head start to deploying effective, trusted data governance for Solvency within your environment.

  • Manage data policies and artifacts for risk

  • Complete SAM data directory support within a single solution

  • Business user friendly to support collaberatrion across the busniess

  • Initial deployment within ten days

 

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