Solvency II deadline will be missed, say 37% of insurers

The number of insurers who fear the industry will fail to meet the deadline for Solvency II compliance has soared by 50% over the last year.

That is according to a report commissioned by Deloitte and conducted by the Economist Intelligence Unit, which revealed that of the 60 UK-based insurers surveyed, 37% believe the sector will miss the cut-off point of January 2014 – up 24% from last year.

The rise has been fuelled by the ongoing uncertainty over the detailed requirements for Solvency II which are unlikely to be clarified until closer to the go-live date, giving insurers and regulators little time to prepare.

Seventy three percent of respondents said implementation setbacks had hit budgets, while 42% said Solvency II delays had increased programme costs by more than 5%.

Deloitte lead Solvency II partner Rick Lester said: “There has been a 50% increase from last year in the number of respondents who have expressed concern with the industry’s ability to meet the compliance deadline – and that is despite a delay in the implementation date for insurers until 1 January 2014.

He continued: “Delaying the implementation of the final rules has come at a price for insurers and one in three respondents are concerned about the additional costs of delays.

“The smallest insurers have suffered the biggest dents in their original budgets while non-life insurers have incurred bigger hits than their life company counterparts.”

The date for implementation has been set for 1 January 2013 with the compliance date a year later, but Lloyd’s of London is aiming to have adopted the new regulatory framework by the start of next year.

KPMG director of insurance risk Rob Curtis said there was still work to be done on reporting and disclosure, data and systems analysis, and assurance ahead of the deadline, while medium and small firms not on the FSA’s radar had perhaps not been as attentive to Solvency II requirements.