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Igloo Standard Formula

Simplify the Solvency II SCR calculation


Towers Watson Igloo Standard Formula
The calculation of the Standard Formula SCR
remains a core task in the Solvency II process for
all insurance businesses within the regime.
The application of the Standard Formula Model governance
for Solvency II would appear to be relatively
unchallenging compared to the rigours of putting Governance of the data submitted to the model
an internal model in place. Those businesses that and accountability for any changes made are key
went through the QIS process will, however, be requirements of the Solvency II framework.
fully aware of the challenges of completing the Igloo Standard Formula includes the Data Control
calculation which, despite its deterministic nature, Component (DCC) developed for the wider Igloo Igloo users can
is relatively complex. suite to provide highly effective control and quickly see how
governance of all inputs and outputs including decisions might
While the challenges of developing and managing
sign off and comparison of data and results. impact the risk and
the parameters and calculations for the standard performance of
formula are an unavoidable consequence It also supports direct connection to corporate
their business, and
of Solvency II, Towers Watson Igloo Standard data systems, ensuring a clear provenance for all use model outputs
Formula edition has been developed to directly parameters and results. to promote a wider
understanding of risk
address those difficulties. It retains the
within the business.
out-of-the-box readiness of the EIOPA QIS5
spreadsheet approach but effectively and
efficiently addresses the key governance and
complexity issues.

Figure 01. The web based interface of the Data Control Component

Igloo Standard Formula 3


Key features
Complete implementation

Igloo Standard Formula fully realises the scope of the standard


formula specification, re-implemented into a robust and
flexible platform.
The comprehensive scope of Igloo Standard Figure 02. Helper tabs are integrated into the calculation flow
Formula includes:
All risks and sub risks as set out in the
technical specification.
All helper tab calculations.
Aggregation of group structures, enabling the
user to select an arbitrary combination of
insurance entities for combination.
Support for calibration of undertaking
specific parameters.
Population of relevant QRT output.

Ease of use
Reduced complexity
Igloo Standard Formula is designed to reduce the
complexity of the calculation process, providing
facilities to remove or hide functionality, inputs and
outputs that are not required; for example where Figure 03. User friendly reports drill into detailed results
life and health functionality is not relevant then
this can be hidden within the interface.
Simplified processes
The software removes the requirement for
iterative calculations that existed when using
certain of the helper tabs in the QIS5 spreadsheet.
This significantly simplifies the flow of calculation,
making the results easier to understand and
reducing the need for multiple runs.
Drill down
It also offers market leading facilities to drill
down into the calculation, highlighting important
intermediate results and providing significant
insights into the drivers of the SCR.
Integrated documentation
Furthermore, by hovering over specific inputs or
results users can reference context sensitive
elements of the technical specification documents
for the SCR, MCR and Own Funds calculations.
Streamlined user interface
Combining data input, calculation and reporting
all into the powerful Igloo platform allows quick
what if? and sensitivity analysis without an
onerous governance burden or the need to switch
between applications.

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Maintenance
Igloo Standard Formula users also benefit from: Internal maintenance
Users of Igloo Standard Formula that also license
Towers Watson updates Igloo Extreme can perform their own maintenance on
Igloo Standard Formula is a fully supported and the product, allowing the business to understand the
maintained product. This means that Towers Watson impact of suggested changes to the standard formula
will provide timely updates to accommodate any prior to scheduled updates becoming available.
changes made by EIOPA either to the standard
formula parameters or to the calculation logic. Changes in standard parameters
Igloo Standard Formula allows all users with
Product updates will be made available through our appropriate permissions to adjust the model
web update facility giving clients instant access. underlying assumptions and parameters. This
Igloo Standard Formula helpline allows the business to test the impact upon the
A user helpline provides fast and expert advice in standard formula SCR of changes proposed by
the use and deployment of the software. EIOPA or alternatively, to stress test based upon
benchmarks or internal viewpoints.
Consulting advice
Should consulting advice be required around Seamless upgrade path
the application or interpretation of the standard The standard formula calculations can easily be
formula, Towers Watson offers market-leading integrated with other Igloo models.
expertise and advice that is tailored to your own
specific requirements.

Figure 04. Context sensitive technical documentation

Igloo Standard Formula 5


Part of the Igloo family Igloo provides an efficient and robust approach to
Solvency II standard formula compliance and is a
Igloo is the leading capital modelling platform in valuable tool, whether as a standalone system for
the market; the Standard Formula edition allows the calculation of regulatory capital for those with
users to benefit from many of the advantages an internal model, a useful sense check if using
of the Igloo platform in a conveniently packaged more sophisticated models, or as the basis for the
format with an easy upgrade path should that development of a partial model.
be required.
The modular building block approach at the core
of Igloo allows users high levels of flexibility to
introduce more sophisticated components in
those keys areas not represented appropriately
by the Standard Formula to take advantage of
the provision for partial internal models with the
Solvency II framework.

Figure 05. Modular calculation structure

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Igloo Standard Formula is intended to
significantly reduce the complexity of
the calculation process with a flexible
and robust environment.

Igloo Standard Formula 7


Software portfolio
Towers Watson provides sophisticated risk, analytics and consulting solutions that help
P&C and life insurers meet the rapidly evolving demands of todays market.
Towers Watsons software offerings provide a truly comprehensive portfolio of analytical software.
We combine innovative actuarial thinking with software expertise to develop comprehensive solutions
that measure value, manage risk and safeguard solvency.

Pricing software Financial modelling software


Our software tools enable you to plan, manage and Clients in more than 30 countries leading P&C and life
optimise your pricing process. Used independently insurance companies, multinationals, pension funds,
or with our consultancy services, these tools are mutual funds and asset managers use our systems
powerful additions to your business. for enhanced risk and capital management.

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Emblem Classifier Igloo ResQ

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Radar Base Radar Dashboard MoSes RiskAgility

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Radar Optimiser Radar Live RiskAgility EC Replica

Marketing analysis software Standard Formula


These additions to our established capital modelling
Optimise media and advertising spend to defined solutions aim to simplify the challenges of calculating
sales and marketing objectives using granular the Solvency II Standard Formula SCR for life, P&C and
actuarial techniques. composite insurers.
Towers Watson
Towers Watson Towers Watson
MediaOptimiser
RiskAgility SF Igloo SF

For more information, contact your local Towers Watson


office or email us at software.solutions@towerswatson.com
About Towers Watson
Towers Watson is a leading global professional services
company that helps organisations improve performance
through effective people, risk and financial management.
Towers Watson is represented in the UK by Towers Watson Limited
and Towers Watson Capital Markets Limited. With 14,000 associates around the world, we offer
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Copyright 2012 Towers Watson. All rights reserved.


TW-EU-2012-28655. October 2012.

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