Insurers facing tough and expensive push for Solvency II deadline, finds PwC survey
5/1/2011 11:23
• More than 40% of insurers are still only in the preparatory stages or have yet to launch their Solvency II projects
• Project budgets are expected to increase sharply over the next two years
• Concerns remain over whether the amount of skilled people required to complete projects will be available
Nearly three quarters (74%) of insurers are confident they will meet the 2013 deadline for implementing Solvency II, despite more than 40% only being in the preparatory stages or yet to launch their projects.
According to a recent PwC survey of 115 insurers in 22 countries across Europe and outside the EEA, 11% have not yet launched their Solvency II project. Of those that have started the implementation process, the majority of respondents are only a quarter of the way through.
The survey also revealed many insurers are unsure about the amount of additional money and people they will need to complete the project. Respondents expect most of the remaining costs to come from IT spend and staff recruitment.
Overall budgets for implementing Solvency II vary, with the majority (40%) having a budget of less than €1m. Only 9% of those surveyed predict spending more than €20m on the whole Solvency II project. Of those who have already launched their Solvency II projects, 83% have spent less than 20% of their overall budget, indicating that the majority of the effort will come in the next two years.
Paul Clarke, global Solvency II leader at PwC, commented:
“The survey findings raise challenges about whether insurers are leaving enough time to tackle the more complex aspects of Solvency II. Some insurers could therefore find themselves with an excessively tough and disruptive late push for the line.
“Insurers are facing difficult questions over whether hiring the additional people needed with the required skills will be possible. Many could find themselves paying over the odds for people with the right skills if they don’t clarify their resource needs sooner rather than later.
“Solvency II budgets may have to rise considerably, as the majority of effort will need to come in the next two years as detailed rules in the level 2 implementing measures are issued.”
Androulla Pittas, Partner in Assurance Services and Insurance Industry Leader at PwC commented “Insurance companies will face major challenges over the next two years in order to meet the challenge of this framework. Cypriot companies face additional challenges arising from the size of existing companies”.
• Project budgets are expected to increase sharply over the next two years
• Concerns remain over whether the amount of skilled people required to complete projects will be available
Nearly three quarters (74%) of insurers are confident they will meet the 2013 deadline for implementing Solvency II, despite more than 40% only being in the preparatory stages or yet to launch their projects.
According to a recent PwC survey of 115 insurers in 22 countries across Europe and outside the EEA, 11% have not yet launched their Solvency II project. Of those that have started the implementation process, the majority of respondents are only a quarter of the way through.
The survey also revealed many insurers are unsure about the amount of additional money and people they will need to complete the project. Respondents expect most of the remaining costs to come from IT spend and staff recruitment.
Overall budgets for implementing Solvency II vary, with the majority (40%) having a budget of less than €1m. Only 9% of those surveyed predict spending more than €20m on the whole Solvency II project. Of those who have already launched their Solvency II projects, 83% have spent less than 20% of their overall budget, indicating that the majority of the effort will come in the next two years.
Paul Clarke, global Solvency II leader at PwC, commented:
“The survey findings raise challenges about whether insurers are leaving enough time to tackle the more complex aspects of Solvency II. Some insurers could therefore find themselves with an excessively tough and disruptive late push for the line.
“Insurers are facing difficult questions over whether hiring the additional people needed with the required skills will be possible. Many could find themselves paying over the odds for people with the right skills if they don’t clarify their resource needs sooner rather than later.
“Solvency II budgets may have to rise considerably, as the majority of effort will need to come in the next two years as detailed rules in the level 2 implementing measures are issued.”
Androulla Pittas, Partner in Assurance Services and Insurance Industry Leader at PwC commented “Insurance companies will face major challenges over the next two years in order to meet the challenge of this framework. Cypriot companies face additional challenges arising from the size of existing companies”.
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