Over three quarters of insurance companies believe that the Solvency II implementation date will be delayed beyond its intended start date of 1 January 2014, according to research conducted by Barnett Waddingham, UK’s leading independent firm of actuaries, pension administrators and consultants.
The survey, which was designed to find out how prepared firms are in all the main areas of Solvency II, showed that of the 39 Insurance companies surveyed only 24% of respondents are confident that Solvency II will be implemented on 1 January 2014.
The survey revealed:
Insurance companies are getting on top of Pillar 1 - the design, creation and testing stages of the internal model approval process are progressing well but validation and documentation need further work
55% of respondents said they are behind schedule with their Own Risk Solvency Assessment (ORSA) but 87% of respondents said that their attention will now be on implementing their ORSA
The practical implementation aspects of the ORSA were identified as being the most challenging: 71% indicated that they have had problems translating the technical requirements of the ORSA into a practical plan
68% of respondents indicated that they will now be devoting more time to meeting reporting requirements
45% of respondents do not have the required data readily available and only 26% have started considering the narrative content
53% of insurance companies who responded have not yet considered the impact of Solvency II on the management of its defined benefit pension scheme
The uncertainty surrounding Solvency II has impacted the availability of resources for 97% of insurance companies that completed the survey and 60% responded that it has had a negative impact on their Solvency II project
Kim Durniat, Associate, Barnett Waddingham said:
“Whilst we can see that firms are progressing with the quantitative aspects of Solvency II, it is essential that firms consider more closely what Solvency II means for their business.
“Insurance companies need to review their approach to capital management by looking at their investment strategy, reinsurance arrangements and business mix. It is also concerning the amount of firms that have not yet considered the impact that Solvency II may have on their pension scheme. All departments of insurance companies should be focused on implementation of Solvency II and not just the Solvency II project teams.”
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