European firms also "lagging behind" the US in addressing IFRS issues
Solvency II will force insurers to shrink the number of subsidiaries they have across Europe, Deloitte says.
Deloitte general insurance actuary Lis Gibson said the omission of group supervision, which would have allowed multinational insurers to be regulated by one body across borders, would trigger the change.
She said insurers were worried about allocating capital across so many different countries and would instead reduce their subsidiaries to concentrate capital in fewer countries.
“Group companies will say, ‘Fine, I’m going to reduce the number of subsidiaries. Instead of having 15 separate territories, I’m going to have it in three.’ There will be a high level of activity while they sort it out.”
Gibson also warned that the new European framework for regulating insurers, scheduled for 2012, meant insurers were putting off other important work.
New International Financial Reporting Standards (IFRS) were set to come in shortly after Solvency II, but insurers were behind changing their accounts reporting.
“American companies are far more alert and have started to work on it, while European companies, because of Solvency II, are lagging behind corporate America,” Gibson said.