By Maximilian Clarke
A last-minute delay in implementing EU directive, Solvency II, has left insurers in a state of uncertainty that risks overturning efforts made by the industry to implement the changes, PwC have said.
The Solvency II proposals dictate how much capital an insurance company must hold relative to the value of the insurance offered, in order to protect consumers in the event of collapse.
"UK insurers are keen for the FSA to push ahead with their Solvency II implementation programme, and in particular the model approval process, given the huge investment companies have made in people and tools to date,” said Jim Bichard, Insurance Partner at PwC. Many insurers are concerned that an additional year will add unnecessary costs as companies will have to comply with, and produce data and information for, parallel regimes in 2013.
"While certain elements of a delay would be welcome, nobody wants a loss of momentum as insurers have been working towards Solvency II for many years and are eager to start embedding it into their businesses.
"Sticking to the original 2013 plan will give UK insurers more time to iron out any issues and be fully compliant by day one. If the timetable slips it will give companies little time to put any issues right before they have to be fully compliant.
"The sooner insurers are able to transition from planning to implementation, the sooner companies will be able to run their businesses on a Solvency II basis and the more competitive and reputational advantages they will gain.
"Clearly the uncertainty around implementation date is not ideal, but the main foundations of the directive and their implications are well established and unlikely to change. There is, therefore, no reason why insurers cannot press on with their plans while the timings and technical details are being finalised."