Although the majority of European insurers believe that an EU directive designed to harmonize national solvency regulations will increase transparency and controls in managing risk, just under half have started preparing for the new rules.
According to a survey from consultants Accenture, nearly four-fifths (78%) of European insurers believe that Solvency II, the EU directive establishing a common solvency system in Europe will improve transparency and controls in managing risk and capital.
More than three-fifths (62%) anticipate improvements in their organizations’ allocation of regulatory capital, the capital reserves that regulators require be set aside with no exposure to market risks.
Despite the positive outlook, only 49% of the insurers surveyed had already enacted formal programs to plan and mobilize for Solvency II. European insurers should expect a positive outcome from the directive, but plan for major changes – and do so soon, said John Smith, executive and Solvency II lead at Accenture.
Those who have not yet developed or enacted a plan must assess the required efforts and areas of immediate focus quickly in order to allow adequate time for preparation and to understand the hard work ahead for complying with and realizing the benefits of Solvency II.
Another report has suggested that some EU countries are less prepared for the new rules than others. IT group SAS said German companies are still a long way from compliance, while the UK will be better prepared. Other insurance analysts have claimed that France is the worst prepared for the changes.
Solvency II should become an EU draft directive this autumn, with an introduction planned for 2010.