Insurance companies are getting better at the way they handle and protect data, but there are still some areas they fall short in.
According to a report released today by the Prudential Regulation Authority (PRA), the insurance industry has seen "steady" improvement since the financial services watchdog published a study on the issue of data use for those going through the Solvency II internal model process in 2012.
In particular, firms had made strides to include data governance in their regular workflow and many have come to grips with IT issues that were facing them at the time of the earlier report.
However, today's report also highlighted areas were insurers could still improve, such as getting better classifying types of data and representing the flow of data in a clearer way.
Encouraging insurers and asset managers to "think outside the box" when tackling data use, Craig Skinner, advanced risk and compliance analytics leader for Insurance and Investment Management at PwC, remarked:
"Organisations are creating, collecting and storing ever increasing amounts of more and more complex data. Coupled with the complexities of the processes and using multiple – and often legacy – IT systems firms must apply ever more controls and ongoing assurance over material data in a pragmatic but rigorous manner."
While correct data use has always been important for the industry, it has even more relevance since the Solvency II rules, which aim to ensure insurance companies are holding enough capital to deal with claims and reduce their risk of insolvency, came into force on 1 January 2016.
Yalini Pathy, UK insurance and investment management data governance leader at PwC, added: "Data governance, when pragmatically applied, does underpin wider commercial benefits. When data is protected and managed appropriately, there are benefits far broader than simple Solvency II compliance."