European insurers are largely on track to meet their Solvency II requirements. An Ernst & Young survey reveals that 80% of major European insurance firms have begun their implementation programme.
However, insurers still face a host of challenges to develop internal models, improve information systems and enhance skill levels.
Ernst & Young interviewed senior managers in 54 European insurers as part of its 2006 Solvency II Readiness Survey: Readiness and Beyond.
Other highlights of the survey are:
•Only 20 per cent of respondents believe their current capital models will comply with Solvency II, whilen early half of insurers believe their internal models will need significant enhancement
• 53 per cent of insurers believe necessary changes to their information systems will not be a significant issue
• 64 per cent of insurers highlight a need to upgrade the skills of actuaries and risk managers to deal with the challenges of Solvency II; of these, 15% recognise their current skill base falls short of the level required and many anticipate difficulties in hiring competent people.
Malcolm McCaig, a UK financial services partner working on the Solvency II Taskforce, commented: “Solvency II pressure on insurers is mounting and the timetable is becoming critical. While the industry is embracing the benefits, there are practical issues around readiness which must be overcome. Insurers are facing the challenge of developing internal models, the adequacy of information systems, the complexity of data requirements and the skills levels within their organisations.”
