Solvency II budgets could rise sharply by 2013

Nearly three quarters of insurers are confident they will meet the January 1 2013 deadline for implementing Solvency II, despite more than 40% only being in the preparatory stages or yet to launch their projects.

According to a recent PwC survey of 115 insurers in 22 countries across Europe and outside the EEA, 11% have not yet launched their Solvency II project.

Of those that have started the implementation process, the majority of respondents are only a quarter of the way through.

Overall budgets for implementing Solvency II vary, 40% of respondants having a budget of less than €1m.

Paul Clarke, global Solvency II leader at PwC, said: “Solvency II budgets may have to rise considerably, as the majority of effort will need to come in the next two years as detailed rules in the level 2 implementing measures are issued.”

Only 9% of those surveyed predict spending more than €20m on the whole Solvency II project.

Of those who have already launched their Solvency II projects, 83% have spent less than a fifth of their overall budget, indicating that the majority of the effort will come in the next two years.

Clarke added: “The survey findings raise challenges about whether insurers are leaving enough time to tackle the more complex aspects of Solvency II. Some insurers could therefore find themselves with an excessively tough and disruptive late push for the line."

“Insurers are facing difficult questions over whether hiring the additional people needed with the required skills will be possible. Many could find themselves paying over the odds for people with the right skills if they don’t clarify their resource needs sooner rather than later,” Clarke continued.