In May 2009, BDO LLP conducted a nationwide survey of life and non-life insurers to gauge the sector’s level of preparedness and concerns about the new regulatory regime which will be introduced into the UK known as Solvency II.
One of the key principles behind Solvency II is to create a level playing field across Europe. How achievable this will be is open to debate – especially given the number of different regulatory cultures and environments that will be brought together under the regime.
Solvency II will be based on three key aims or pillars:
In the current environment insurers can not afford to ignore these requirements – particularly as the regulator is cracking down on firms who aren’t up to scratch. .
Our survey highlighted that the biggest concern of the three pillars is the establishment of a consistent standard and level of information to be disclosed in the public domain. This is understandably important, as the need to safeguard sensitive information is crucial in order to remain competitive.
Firms must not be disadvantaged by the level (and type) of information they are required to make public. A clear level of consistency in disclosure requirements will help to achieve this. However, the problem is that the level of disclosure that will be required by Solvency II has not yet been clarified.
Our advice is to stay close to those who have excellent relationships with the regulator to ensure that when this information is available you are ready to act immediately. BDO’s Financial Services Group can help businesses understand the issues around Solvency ll and guide you through this regulatory minefield over the coming months.
The other bugbear for many firms is that to implement the requirements will involve a significant level of training across both management and company. To ensure everyone has the appropriate level of training it is essential that a training plan is mapped out now rather than leaving it until the last minute.
While the requirements do not need to be finally implemented until October 2012, our advice is to begin preparation now to ensure that the right decisions are made for their businesses and that the deadlines can be met.
If you would like further information regarding this subject, or would like to attend our Solvency II breakfast briefing please contact our insurance specialist, Kirstie Gordon, within BDO’s Financial Services Group.