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Author Nicolas Michellod, senior analyst at Celent, says that although the provisions are a "political work in progress", insurers needs to be examining whether their infrastructure is up to handling the demands of the forthcoming rules. "Maximising existing hardware and software is an advantage of the build approach, but doing so may well encourage suboptimal decisions in the design of the application", he says.
"Experience shows that a customised solution typically has a longer implementation time, greater risk of failure and is unable to benefit from innovation driven by a vendor."
Lars Falkenberg, assistant director of SimCorp StrategyLab, adds: "Complying with Solvency II is crucial for insurers, but they are not alone in facing an increasingly constrained regulatory environment. Beyond insurers, asset managers, pension funds and more are dealing with global compliance challenges.
"Internal IT infrastructures may work, but these organisations need to ask themselves the hard questions in determining whether these solutions can truly keep them ahead of the regulatory curve in this ever-changing environment."