insurance industry’s approach to the Solvency II European insurance
capital adequacy directive, suggests a study undertaken by business
advisory firm Deloitte. Indicatively, Deloitte found that of
insurers surveyed, 70 percent do not yet have a programme in place
to equip themselves for the Solvency II directive which is due to
be implemented in 2012.
Commenting, Deloitte insurance partner Rick Lester said: “Many
insurers have been busy complying with other regulations such as
the introduction of Individual Capital Assessments and MiFID
[Markets in Financial Instruments Directive] and may not yet have
turned their attention to Solvency II. However, with five years to
go to the deadline, the task of adoption and implementation is in
danger of being underestimated, with too few resources being
deployed to the task.”
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Knowledge lacking
Many insurers have a considerable amount of catching up to do if
they are to grasp Solvency II. Deloitte found that although there
is a general awareness of Solvency II, there appears to be a lack
of detailed knowledge of the process. Nearly half (43 percent) of
respondents to its survey said they possess awareness and
understanding of the principles of Solvency II but no detailed
knowledge of its stipulations.
Attitudes towards Solvency II tend to the negative and, said
Lester, most insurers view its implementation as purely a
regulatory burden, rather than as a tool that can help their
business to achieve its strategic goals. Of insurers surveyed, 69
percent feel that Solvency II is just another regulatory burden and
43 percent said the cost and disruption of compliance will outweigh
any benefit that may be derived. Another 21 percent believe the
overall impact will be neutral and that any benefit will be offset
by the investment required to put the directive into
practice.
“Though it is understandable that insurers are not enthusiastic
about adopting another set of regulations, viewing Solvency II
simply as a compliance burden not only presents potential problems
but also missed opportunities,” said Lester.
