Insurers less confident about Solvency II deadline

A new survey shows a dramatic slump in the proportion of insurers which are confident that the industry will be able to meet the January 1st 2013 deadline for implementing Solvency II.

The survey of insurers, carried out by the Economist Intelligence Unit on behalf of Deloitte, shows that only 46% of insurers are confident the sector will meet Solvency II deadline, down from 63% in 2010.

The survey findings follow last week’s letter by European insurance heads to EU internal markets commissioner Michel Barnier warning that there will be “dire consequences” if the directive is implemented in its current form.

The concerns over lack of preparedness will be compounded by the survey’s finding that 40% of insurers have 40% or less of their dedicated Solvency II personnel in place, with 12% of insurers having only embedded 20%.

However, 73% of companies told Deloitte that they were confident or very confident that their company will be ready for the new insurance directive, reflecting greater optimism about their own state of preparation than that of the industry as a whole.

The survey also shows that 36% of non-life insurers expect that they will need to reorganise or restructure in order to comply with the directive, while 11% believe they will need to introduce new products.

Deloitte Solvency II team lead partner Rick Lester said: “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.

“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.”