The insurance industry is struggling to comply with last-minute requirements of the Solvency II directive before its implementation in January 2016, research has revealed.
A survey of insurers by pan-European insurance trade body Insurance Europe showed that many respondents were concerned over timelines for implementation and compliance.
Many respondents were concerned that the final version of the Quantitative Reporting Templates, which insurers need to comply with the third pillar of Solvency II, will only be adopted by the European Commission this September, just four months ahead of when the new regime comes into force.
Igotz Aubin, head of prudential regulation at Insurance Europe, said: “Europe’s insurers have made substantial progress towards implementing Solvency II, especially given that this task has been completed during a particularly challenging time for the industry.
“However, this survey has also revealed a number of serious issues that need to be acknowledged.”
He warned that, due to the volume of items that require approval from supervisors under Solvency II, a flurry of applications for approval could be submitted at a time when supervisors’ resources are already stretched.
Also, most national supervisors intend to fully comply with approximately 700 guidelines issued by the European Insurance and Occupational Pensions Authority, often on its own initiative. However, these guidelines add approximately 1,100 pages to Solvency II, which has increased the implementation burden on insurers.
Insurance Europe also warned that work to comply with further additional requirements set by member states, which augment Solvency II, was slowing down the implementation process.
In June, Huw Evans, director general of the Association of British Insurers, said of Solvency II: “The obvious challenges are how conservative our domestic and EU regulators will seek to be in the approval processes over the coming months and in their final framing of certain areas.
“It will remain important that regulators are true to the spirit of the agreement reached, which sought to balance appropriate capital levels with the need for insurers to be able to contribute fully to economic growth and prosperity.”
Simon Webster, managing director at Kent-based chartered financial planners Facts & Figures, said: “It will have little direct effect on us. But I can’t help feeling that it is a pointless exercise.
“The regulators feel they have flexed their muscles. Perhaps they have too much time on their hands. I do not think it will achieve much except to place dead capital on the balance sheet which could have been used for development.”