A new report from Deloitte states that the postponement of Solvency II is costing insurers, with almost three quarters saying implementation setbacks have taken a toll on their original budgets, and 42% will have to increase budgets by more than 5% as a result of the delay to full implementation of Solvency II to 1 January 2014.
Rick Lester, lead Solvency II partner at Deloitte, said: “The primary underlying cause for concern is the continued uncertainty around the detailed requirements of Solvency II and the fact that these are unlikely to be clarified until relatively close to the go-live date.
“This means there will be not much time for insurers and regulators to finalise their arrangements and approach with complete knowledge of the rules.”
Tristan Garnon-Williams, policy adviser at the Association of British Insurers (ABI), said: “A lot of Solvency II’s costs are more upfront and obvious. But you expect to see positive business results through things like improved risk management, better understanding of risks and through the [own risk and solvency assessment] ORSA processes. It’s reasonable to expect those benefits to manifest over a longer time horizon, which is maybe why people cannot see them as quantifiable at this stage.”
Of the insurers polled in the report, 25 were non-life and 35 were life companies. Respondents were grouped in size from the very largest with more than £1bn in net written premiums; (NWP) medium sized-companies with between £300m and £1bnin NWP.