Barnett Waddingham, Experimentus and Synergy Compliance Solutions said ‘Troika’ would give companies confidence that the internal validation process they are using to meet the legislation’s Solvency Capital Requirements is suitable for approval by the Financial Services Authority.
Without FSA approval of the internal model validation, a firm would have to adopt the European Standard Formula for calculating capital requirements. Doing so would potentially require ‘significant levels’ of additional capital – making the internal model a more attractive option.
Research by Barnett Waddingham found that 80% of companies were already, or planning to, validate their model internally. But, the consultancies said the FSA had recently raised concerns over the level of independence and thoroughness of internal model validation.
According to the consultancies, using Troika will give insurance companies ‘truly independent’ assurance that their internal model will meet with the Solvency II requirements.
SCS director Harpreet Julka said: ‘Solvency II is transforming the way the insurance industry works. Troika will help accelerate the journey that UK firms are undertaking to implement Solvency II and we are delighted to be playing a catalytic role.’
Julian Clarke, director of sales and marketing at Experimentus, said Troika would be a ‘one-stop-shop’ assurance service for insurance companies, while John O’Neill, partner at Barnett Waddingham, added: ‘This is a great opportunity to work with leading companies to provide a much needed service to the UK Insurance Industry.’