E-commerce: Solvency II to make brokers more accountable for data

Set to 'go live' in November 2012, Solvency II will require insurers to be responsible for client data whether it is stored internally or outsourced to a third party.

Rob Stavrou, a director at e-business consultancy Northdoor, said this demand had made insurers cautious of cloud computing and that they could be equally worried about the brokers they deal with outsourcing data they will ultimately be responsible for.

"Solvency II is focused on the industry understanding data and being able to evidence this. Cloud computing is scalable and provides flexibility but insurers won't know exactly where their data is as it will be governed and controlled by the cloud provider," he added.

Head of compliance at the British Insurance Brokers' Association, Steve White, said that while Solvency II would not directly impact brokers it was true that those with delegated arrangements would face demands from insurers to protect data and that they should also be prepared to be able transfer it quickly.

While Mr Stavrou was keen to point out that he didn't think Solvency II would stop insurers using cloud computing outright he continued: "At this stage of the process insurers are being made acutely aware of their responsibility so it would be a leap of faith to pass control of their data to a third party.

"This is why there has not been a huge take up yet in the industry. Banking is further along the regulatory route and cloud computing is popular within this sector. I can see this happening in insurance once it has shown it has its house in order."

According to Mr Stavrou virtualisation could be one solution for insurers and brokers that are reluctant to fully adopt cloud computing.

"Virtualisation lets firms run multiple virtual machines on a single physical machine, with each virtual machine sharing the resources of that one physical computer across multiple environments. This greatly reduces the number of servers needed - but firms still have control of the data as it is still on the servers whereas with the cloud the data could be anywhere," he explained.