PA Consulting Group has launched a survey to assess how prepared the industry is for Solvency II.
Only half of insurers understand the full impact of the regulation and less than a third have an adequate budget in place to complete the program, according to the survey of insurers.
After a long period of uncertainty, 2016 is now the proposed implementation date. The study concludes that despite the implementation approaching, fundamental issues remain to be overcome in the insurance industry. Challenges were highlighted across all the three pillars of the directive.
The survey found that two thirds of insurers do not expect to be ready to meet EIOPA’s preparatory guidelines on the System of Governance by January 2014. Although the guidelines are preparatory and there is no need for a costly or rushed implementation, firms must immediately build a credible plan to achieve compliance.
Four out of five insurers questioned expect reporting to start by mid-2015 and almost all expect to be ready in time. The survey indicates that there is a risk that the industry is underestimating the challenge as, despite the demands of Solvency II reporting, no firm has spent more than 25 per cent of its budget on developing reporting systems.
The biggest overall delivery worry for insurers is further change to the timetable or requirements, followed by the availability of operational staff.
Asesh Sarkar, an insurance expert with PA Consulting, said: “As insurers and regulators prepare to step up their Solvency II activity, firms need to ensure their activity – and their budget – is focused in the right places. This means taking a hard look at the value of internal models and ensuring they are investing enough in IT to prepare for Solvency II.
