Smaller firms may also have slipped further behind their bigger rivals
In a speech in London yesterday, the deputy head of the Prudential Regulation Authority and executive director of insurance Julian Adams said insurers needed to restart their Solvency II programmes.
He acknowledged that delays to the timetable made it difficult for insurers, but said now that there is more certainty around implementation, insurers needed to get back on track with their Solvency II programmes.
“I realise that a number of firms downsized their Solvency II programmes and reallocated resources to other initiatives and priorities,” he said. “It is now time to reassess priorities and make a concerted push to be able to demonstrate compliance with the new regime two years from now.”
And Barnett Waddingham partner and head of general insurance Cherry Chan said it was the smaller insurers who had more work to do to ensure compliance with the regulations when Solvency II comes into force in January 2016.
“While a lot of the bigger insurers have made good progress with their reporting and own risk and solvency assessments we’ve seen very few smaller insurers having made the same progress. These companies need to up their game over the next two years,” she said.
Adams was also keen to highlight that while the timetable may look as though there is plenty of time, the complexity of the changes means insurers cannot get complacent about their implementation work.
“Looking out, two years may seem like a reasonably long period of time. However, working backwards – and taking into account the time needed to make decisions – shortens it markedly from 24 months to closer to 15 months – which ties in with transposition on 31 March 2015,” he said. “So you can see that there is a lot to do and getting to January 2016 in good shape is only the start.
“If our experience of Solvency II is the same as for the introduction of the ICAS regime in the UK – and taking into account transitional arrangements – we may be looking at the best part of a decade for us and firms to be able to use the regime.”