Risk Management

  • Adaptation of the integrated risk management system in both Zavarovalnica Triglav and the Triglav Group to Solvency II requirements was completed.
  • At any given time in 2015, the available capital ensured compliance of Zavarovalnica Triglav and the Triglav Group with the capital requirements in accordance with the new legislation. The capital adequacy of Zavarovalnica Triglav and the Triglav Group remains sufficiently high also in accordance with the new Solvency II regulations.
  • Comprehensive and conservative risk management was continued.

As of 1 January 2016, the new Solvency II legislation came into effect, which has introduced a new concept of governance of insurance undertakings and groups, structured into three main areas or pillars.

  • The required level of capital must reflect the profile of risks to which an individual insurance undertaking or group is exposed in the course of its business.
  • An effective risk management system has to be set up, which is able to identify and assess the impact of business decisions on the risk profile, capital and financial position of the company.
  • Detailed reporting to the supervisory agency and the public is prescribed about the risks to which the insurance undertaking is exposed and the assessed capital adequacy.

In 2015, in Zavarovalnica Triglav, the parent company of the Triglav Group, the following planned development activities and the preparations for the entry into force of the amendments to the legislation were completed in the context of the Solvency II project:

  • In the context of the first pillar, the capital adequacy calculations of Zavarovalnica Triglav and the Triglav Group in the quantitative area were made on 31 December 2014 and 30 September 2015. To this end, not only the regular calculation process of insurance technical provisions for the purpose of capital adequacy was set up but also the valuation process of investments and other balance sheet items in accordance with Solvency II requirements. In 2015, an upgraded own risk and solvency assessment (ORSA) was conducted for both Zavarovalnica Triglav and the Triglav Group. It was found that Zavarovalnica Triglav and the Triglav Group had sufficient capital, which at any given time in the previous year ensured them compliance with Solvency II capital requirements. 
  • A risk management system adapted to the Solvency II requirements was established, which is able to identify and assess the impact of business decisions on the risk profile, capital and financial position of the Company, thereby improving the performance of the Company and ensuring compliance with legislative requirements. In the upgrade process, internal risk management documents by risk type were revised, specifying the competences, responsibilities and methods of individual risk type measurement and monitoring. The changed relationship between the risks and profitability of particular products was taken into account in the formation of the Company’s portfolio, which is adequately balanced and guarantees long-term, financially stable and profitable operations. The risk management system of the Triglav Group enables a comprehensive overview of the risk concentration within the Group and the risks related to intra-group transactions. 
  • Reporting to the supervisory bodies was provided for, which changed in particular in the part relating to the capital adequacy of insurance undertakings and insurance groups as well as to annual reporting on own risk assessment. Due to higher requirements with respect to reporting and requirements regarding the data quality, investment in software (particularly the establishment of a data warehouse) was increased and standardised reporting to the decision-making bodies introduced, which enables fast and centralised access to information about risks. In the reporting year, the Company fulfilled all the requirements of the regulator related to reporting and started to prepare new required regulatory reports and public disclosures on solvency and financial standing.

The application module of the corporate governance of the Company was affected by Solvency II. Based on the new governance principles, the Management established a solid and reliable governance system which ensures a transparent organisational structure with well defined and consistent internal relationships with respect to liability, efficiency of information transfer to the organisational structure and decision-making processes of integrated key governance functions. The latter include the risk management function, the compliance function, the internal audit function and the actuarial function. The governance system of an insurance undertaking is based on an effective risk management system with a clear risk management strategy, written rules, processes, measures to ensure regular operations, which are consistent with its systems, as well as sources and procedures, including a contingency plan. 

The System and the Governance Policy of Zavarovalnica Triglav and the Governance Policies of Zavarovalnica Triglav’s Subsidiaries define the main guidelines for the governance and management of the Company, taking into account the set strategic objectives and values of the Group. As mentioned in Section Governance Policy, these two documents represent the basis for the setting up and implementation of a robust and reliable governance system. The latter is based on an efficient risk management system and enables the implementation of the business strategy of the Company.