Experience report of ORSA process in zeb.control—dealing with current challenges

Initial situation

Since the preparation phase for Solvency II began, insurance companies have been gathering valuable experience in conducting own risk and solvency assessments (ORSA). The regularly submitted ORSA reports have now been analyzed by BaFin (Germany’s financial supervisory authority). As part of this analysis, the regulator identified needs for action and published results.[1] The BaFin remarks as well as recent customer feedback to zeb reflect the needs for flexible, audit-proof and software-based processes.

zeb.control module for Pillar II—What’s new?

The Pillar II module in zeb.control covers the ORSA requirements for analyzing and presenting the quantitative parameters. At the start of 2017 the updated and fully integrated solution (Pillars I, II and III) was made available and delivered to customers. Through integrating all three pillars into one software program, it is possible to use figures calculated in Pillar I while working on Pillar II. The process steps for Pillar II are integrated into the existing process for Pillars I and III, and the available reporting and analysis capabilities of Pillar III are reused. 

The following overview provides an impression of the functional scope of Pillar II:

  • complete and consistent visualization and support for a multi-year ORSA planning process for insurance companies (solo) and groups, with which the future coverage is projected for all individual companies and the entire insurance group
  • complete ORSA analysis through various simulation types (e.g. regarding the time horizon, data and parameters to be used as well as individual structures for the OSN risk tree or the group structure) and division into external events and internal decisions as well as into fair value simulation, risk simulation, strategic business decisions and tactical management rules
  • definition of various scenarios while considering the own risk profile for the insurance company and assessment of key figures
  • clear and well structured set of reports of the simulation results for risk and solvency analysis

The various scenarios and diverse risk trees, the projections for a defined time horizon and the juxtaposition of results from different scenarios are presented in the figures below.

Figure 1

Figure 1: Various scenarios and diverse risk trees

Figure 2

Figure 2: Projections for a defined time horizon

Figure 3

Figure 3: Juxtaposition of results from different scenarios

Through the described approach the user is able to quickly gain an understanding of the essential risks, simulate them and rapidly achieve consistent results.

Besides the integrated use of Pillar II across all Pillars (I, II and III), the Pillar II solution can also be used independently.

Customer feedback about the implementation

zeb.control was used in 2017 for creating ORSA in various customer situations. The implemented solution with its functionalities has been proven in practice. zeb customers highlight its significant support in terms of process automation. This already begins with data import. Linking feeder systems to the standardized interface of zeb.control prevents an error-prone, manual data supply. In addition, through the integration into the Pillar 1/3 solution, zeb customers leverage the benefits of zeb.control.regulatory – Solvency II as a consistent planning framework and can thus already avoid the majority of data deliveries for the basic key date. This also simplifies the aggregation of the group because data requirements for individual subsidiaries are minimized and the need for coordination is reduced. Moreover, consistency of individual reports to the regulator is thus ensured at solo and group level, which is singled out for praise by zeb customers.

Furthermore, the projection approach has shown very fast calculation speeds. This not only simplifies the day-to-day work with the software solution, but also allows quick feedback for possible business decisions. Projections are regularly used in decision-making sessions with the board of directors to derive an indication of the possible impacts of decisions.

The reports created by zeb.control are part of the ORSA reports of zeb customers and thus accelerate regulatory reporting. In addition, zeb customers appreciate the possibility of defining own reports within zeb.control and thus customizing report creation.

Project experience

The efficient projection approach within zeb.control replaces complex Excel spreadsheets for zeb customers, and in doing so, reduces manual efforts in the responsible departments immensely. This audit-proof approach prevents inconsistencies. Furthermore, due to the faster creation of results, ORSA projection calculations can be considered to a greater degree in business strategy decisions. For instance, the projection logic has already been successfully implemented in intra-year ad hoc ORSA reports. In total, this supports the ORSA aim of greater integration of management decisions and risk management. zeb customers promote this integration by basing projection calculations within zeb.control on existing plans. For example, a mid-term and internally-known HGB plan can be considered in order to derive assumptions about the market value view as consistently as possible. This embedding in the existing planning landscape not only simplifies plausibility checks, but also increases the acceptance of the ORSA results. The following figure presents unique selling points of the ORSA process in zeb.control.

Figure 4

Figure 4: Unique selling points of the ORSA process in zeb.control


With zeb.control, zeb fulfills significant and comprehensive demands relating to ORSA. To continually update the functional scope, also and especially in light of the increasing requirements from the regulator’s point of view, zeb regularly listens to customer feedback about the utilized software and the associated functionality. Customer feedback is fed into the zeb.control release process and thus improves the usability, handling and functional scope of the software. Based on the existing software and current practical experience combined with the development steps envisaged by zeb, the company sees zeb.control as an optimal solution for covering the individual ORSA requirements in customer situations.

[1]See also: BaFin Journal September 2017: ORSA reports

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