General implementation status
European Solvency II survey
Companies are investing up to €250m each on Solvency II compliance, which still may be an underestimate of the effort needed.
Almost 90% of insurers believe they can meet the new 1 January 2015 date proposed by the EC.
While they expect to implement the Pillar 1 balance sheet and most Pillar 2 requirements, Pillar 3 remains a major challenge. Our survey reveals that companies are investing up to €250m each on Solvency II compliance, which still may be an underestimate of the effort needed.
Nearly 43% of European insurers do not expect to comply with Solvency II until 2014 or later. Delaying the timeline to 1 January 2015 – as proposed by the European Commission – will enable almost 90% of the industry to achieve implementation. Most companies are making good progress in Pillar 1 readiness, and more than half have a risk management framework in place for Pillar 2. The most significant work is needed for Pillar 3 disclosure and reporting requirements.
Readiness varies dramatically by country. Our survey focused on Europe's largest insurance markets (UK, Germany, France, Italy, Belgium, the Netherlands, Spain, Greece and Poland). About 70%-80% of Spanish, British, Polish and Greek insurers will be ready for Solvency II in 2013. Dutch insurers (86%) are well prepared and expect to be ready by 2014, with none stretching into 2015. In contrast, 60%-70% of German, Italian, Belgian and French insurers will not be compliant until after 2014. Many German (34%), Italian (17%) and Spanish (13%) insurers will not be able to achieve readiness until after 1 January 2015.
Large companies are making significant investments, from €100m to €250m. The majority expect to complete their implementation projects by mid-2014. Smaller organizations are also increasing resources. However, only 21% estimate an investment of less than five-person years. In our view, many companies have underestimated the effort needed.