European Commission called upon to provide transitional measures to prevent market disruption
More than one in 10 insurers may relocate their businesses from the EU as a result of the introduction of Solvency II, new Deloitte research suggests.
According to a survey of UK insurers’ readiness for the directive’s introduction, carried out by the Economist Intelligence Unit on Deloitte’s behalf, 11% of companies say they may have to relocate their businesses.
The research also shows that 36% of firms are not confident that the industry is ready for Solvency II and 38% of boards are not fully briefed on their requirements under the new directive.
Commenting on the findings, Deloitte’s Solvency II team lead partner Rick Lester said: “It has always been predicted that Solvency II could lead to re-domiciling, but if UK-based insurers leave, it will also have ramifications for employment and taxation levels in Britain.”
The report’s publication follows last week’s public hearing on Solvency II organised by the European Commission, where Deloitte insurance partner Andrew Power warned that the directive’s introduction could destabilise the insurance market unless proposed transitional measures are adopted.
Power said that the enhanced capital requirements outlined in the draft directive “could harm the insurance industry’s competitiveness”. He added: “Unless we have transitional measures, the effects could be very destabilising, not just for the insurance market but for consumers.”
Pan-European insurance federation CEA’s director-general Michaela Koller said that the Commission needed to look at introducing transitional measures. At the meeting, European commissioner for internal markets, Michel Barnier, confirmed that the date for implementing Solvency II has been pushed back to 31 December 2012.