Case Studies

Technical Provisions and Standard Formula Software Implementation

Dynamo has worked in conjunction with a large London Market insurer to develop and roll-out a Technical Provisions (“TP”) and Standard Formula (“SF”) application for three entities. The installation will eliminate the need for spreadsheet based working and reporting, saving time and reducing errors. The applications import all required input data to an SQL database where a series of calculation steps take place. The database is queried by our software to generate standardised and customisable reports.

Each application required different development approaches. The TP application needed to emulate the current system in place at the insurer which was based in a spreadsheet environment. It needed to enhance the transparency and formalise the process that was in place such that the calculation is fully auditable and traceable. This involved discussions with management and analysts to determine the most effective manner to replicate their processes whilst maintaining consistency and auditability.

The SF application follows the calculation outlined by EIOPA. All regulatory parameters and calculation methods have been designed into the application such that given the correct input data the exactly correct SCR amounts are generated by the application. Part of the quarterly roll-out for the SF application is a full reconciliation to make sure that the application still meets the requirements as specified by the latest guidance.

The TP and SF applications are also able to transfer data between themselves in an automated manner, which ensures data consistency and efficiency. This allows liabilities from the TP’s to flow directly in the Standard Formula, and the Risk Margin calculate in the Standard Formula to flow and complete the TP calculation.