EC reveals that 3,600 European insurers yet to take part in consultation.

Solvency II is “a big challenge firms will have to grapple with in 2008/09”, PricewaterhouseCoopers (PWC) has warned.

The consultant said a European Commission study on insurers’ preparations for the EU solvency regime, which is due to come into effect in 2012, has revealed the scale of the task ahead.

The number of insurers who participated in the fourth Quantitative Impact Study (QIS4) last summer was up 37% on the third study in 2007. The number of small insurers rose 58%.

But 3,600 European insurance firms have yet to take part in an impact study.

QIS4 was designed to help policy-makers calibrate the capital requirements of Solvency II, which aims to create a Europe-wide risk-based insurer solvency regime, and to help insurers prepare for the new rules.

Mark Train, a partner at PricewaterhouseCoopers, said: “Firms that took part in QIS4 found a double-edged sword. On one hand, it has helped bring awareness to senior management and to board level, which has led to longer-term planning.

“Firms have a better idea of the likely requirements and its potential impact.

“On the other hand, firms found QIS4 both time and resource-intensive.

“The volume of data required to calculate solvency capital requirements and checking the reliability of this data was a much greater task than firms initially supposed.”

The FSA this week issued a paper explaining the key elements of Solvency II and identifying actions that insurers should take.