As the Jan. 1, 2013 deadline for Solvency II compliance approaches, insurers are expressing unease in their ability to comply, according to a new study conducted by the Economist Intelligence Unit (EIU) on behalf of
The report, which assesses U.K. insurers’ readiness for Solvency II, found that the percentage of insurers confident or very confident about the prospects for industry compliance has dropped by 17 % to 46% in 2011, compared to 63% in 2010. However, insurers were more optimistic about their own chances of achieving compliance than of the industry as a whole, with 73% stating they were confident or very confident they will be ready for Solvency II.
Indeed, the survey also found that most of the 60 insurers surveyed were making internal changes in anticipation of the deadline, with 65% of insurers indicating that they expect to introduce new risk mitigation techniques due to Solvency II. Moreover, 47% of respondents said they may need to reorganize or restructure to accommodate the requirements. This sentiment more pronounced among life insurers (57%) than non-life companies (36%).
“The consequences of Solvency II include the number of companies looking at restructuring or relocating and the anticipated effect it will have on consumers as a result of changes to product mix, design and pricing,” says Rick Lester, lead partner of the Solvency II team at Deloitte. “Despite this, our findings demonstrate that progress has been made over the last 12 months. All respondents have submitted budgets, which is a significant improvement on last year’s figure of 62%. Additionally, 41% have complete budget sign-off, compared to 13% in 2010, and 52% have reached implementation stage, in contrast to 21% last year. Board awareness has increased by 12 percentage points to 95% of respondents.”
