A decision by the FSA to begin the implementation of Solvency II requirements in 2013 despite the expected EU-delay until 2014 would result in significant savings for the UK insurance industry according to new research by Marketforce.
Initial results from the survey, which will be launched in full at Marketforce and the IEA’s 11th annual The Future of General Insurance conference in November, show that 75 per cent of the insurance industry expects to incur additional costs in the event of an extension to the Solvency II deadline until January 2014. Furthermore, whilst the industry broadly supports the aims of the new regulations, 73 per cent do not believe that the overall costs of implementation will be proportionate to the benefits that the new measures will achieve.
Tom Woolgrove, Managing Director of Personal Lines at RBS Insurance said: “There is an understandable concern in the industry over the implications, both in terms of opportunity costs and real costs, of having prepared for compliance a year early. Solvency II will deliver tangible benefits for the UK market, but we need improved clarity over the timescales and expectations of regulators to ensure current implementation efforts remain relevant and to avoid the need to replicate efforts in the interim period.”
Amanda Blanc, CEO, AXA Commercial said: “AXA is fully supportive of Solvency II and already manages its business on an economic basis with a strong internal model in existence. We are making good progress on our transition to the new regime. However, we are disappointed with the extended implementation deadline as it creates ongoing uncertainty around the FSA’s expectations and leaves material issues outstanding.”
With 73 per cent of UK insurers uncertain that the cost of implementation will be proportionate to the benefits that the new measures will achieve, it is not surprising that the industry is openly opposed to a delay which would penalise them for being on-schedule for implementation.
A decision by the FSA to enforce the introduction of the Solvency II rules as of January 2013 would be welcomed by UK insurers, many of which have remained committed to the initial deadline from the outset.
John O’Roarke, Managing Director, General Insurance, LV= said: “After such a lengthy period of preparation, the prospect of a deferral to 2014 is unhelpful. At LV= we have decided to press ahead and operate on an ‘as if’ Solvency II basis from January 2013 in order to sustain our focus on the programme and to minimise costs.”
