As the January 1, 2015 deadline for proposed Solvency II standards approaches, 90 percent of European insurers believe they will be ready to comply, according to new research from Ernst & Young. That is more than double the estimate of insurers (43 percent) that would be ready by January 1, 2014.
However, the majority of insurers are also admitting to struggles with Pillar 3, as well as the push to meet data management requirements. There are also certain regions struggling: 34 percent of German, 17 percent of Italian and 13 percent of Spanish insurers do not think they will be ready to comply until after January 1, 2015.
The report noted the Netherlands and the U.K. as overall leaders in preparedness, but noted an lack of action in terms of preparing IT operations.
Nearly 69 percent of insurers say they have only met some or have not yet met any of the SII data management requirements; 81 percent are struggling in particular with data integration standards and their applications across group and external partners.
“Making the data landscape work requires firms to integrate multiple complex IT systems and is a massive challenge,” said Jan Leiding, partner in Financial Services at Ernst & Young. “The survey shows that progress in implementing appropriate ownership, governance and controls is particularly slow. The shifting EIOPA deadlines have offered excuses but these will be viewed as fundamental failings and now require prompt attention.”
The report also stated that half of respondents are now developing partial or full internal models. Insurers currently estimate an average decrease in SCR of 16 percent from using an internal model and many insurers expect the savings to be much more substantial: 26 percent of insurers expect their SCR to decrease by 20 to 30 percent; 14 percent of insurers expect it to decrease by more than 30 percent.
160 large insurance companies across Europe were surveyed for this report, according to Ernst & Young.
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