Nine out of ten insurers (91 percent) based in Europe, Middle East and Africa (EMEA) say that preparing for the implementation of Solvency II is a challenge for their business, with 31 percent citing this as a ‘major’ challenge. Almost half of EMEA insurers (49 percent) describe their approach to Solvency II as ‘very’ proactive. These findings come from a global insurance survey commissioned by State Street and conducted by the Economist Intelligence Unit (EIU).
The survey, amongst more than 300 senior insurance executives, also found that 83 percent of respondents globally said that adapting to evolving insurance regulation represents a challenge to their business. Only 17 percent of insurers did not view the regulatory environment as posing a challenge at all. As insurers respond to the compliance requirements of new regulation, three-quarters of survey respondents said ensuring transparency of business policies and procedures presents “some level of challenge.”
In EMEA, the top five regulatory concerns identified as a challenge by respondents were:
1. Preparing for the implementation of Solvency II - 91%
2. Complying with FATCA - 88%
3. Keeping pace with evolving EU and national tax legislation - 86%
4. Adapting to regulations concerning unbundling banking from insurance products - 80%
5. Preparing for PRIPs - 80%
Sven Kasper, director of regulatory, industry and government affairs for EMEA at State Street said, “As one would expect, Solvency II tops the list of European insurers’ regulatory challenges. However, there are other significant regulatory initiatives impacting European insurers that may become equally as challenging, such as FATCA by increasing the data and reporting requirements, or the EU11 Financial Transaction Tax leading to increased transaction costs and lower returns.
"This rapidly changing, more complex and demanding regulatory environment has a significant impact on insurers’ overall operations as well as their plans for meeting new and challenging demands from their customers. They need to closely follow regulatory changes impacting them and their clients and maintain adequate systems to accommodate the numerous new regulatory obligations, in particular with regard to transparency and reporting.”
The State Street 2013 insurance industry survey was conducted by the EIU during April 2013. More than 300 responses were received from insurance executives globally across all industry sub-sectors, including life insurance companies, casualty firms and diversified insurers. Half of respondents were C-suite level, while the remainder were in senior management positions. The geographic breakdown of respondents was 36 percent from Asia Pacific, 26 percent from the Americas and 38 percent from EMEA.
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