A new survey conducted by leading business and financial adviser Grant Thornton UK LLP finds that most insurers expect to be ready for the reporting and disclosure requirements of Solvency II by the end of the year. However, it suggests there is a significant minority which may not be ready.
Grant Thornton's survey of senior insurance executive's views on Solvency II Pillar 3 requirements shows that 77% of respondents expect their firm to be ready for Solvency II reporting and disclosure requirements before the new regime goes live on 1 January 2016. The survey also finds that the remainder of respondents predict they will not be ready (5%) or unsure whether they will be prepared in time (18%).
The survey also finds that the majority of respondents (93%) believe that Pillar 3 requirements – which address the reporting and disclosure arrangements of the new regime – are either onerous or excessive. Additionally, nearly all survey respondents (98%) suggest that the quantity and granularity of the information required, along with the resources required in compiling this information, are the biggest challenges in implementing Pillar 3. 92% of respondents identified the reporting deadlines as being either a significant or moderate challenge to implementation.
Simon Sheaf, Head of General Insurance Actuarial and Risk at Grant Thornton UK LLP, commented: "It is clear that insurers have made significant progress on Pillar 3 over the last six months. More than three quarters of all respondents expect to be ready for Pillar 3 by the time Solvency II goes live – an accomplishment which is to be welcomed. However, that still leaves a significant minority who may not be ready for Pillar 3 on time, which is concerning at this relatively late stage in the preparations for the new regime.
"In spite of greater engagement with Pillar 3, there are still some significant issues for insurers to address. It is clear that producing information in the detail required is a major challenge, as is meeting the very demanding reporting deadlines. These challenges are exacerbated because it appears that a lack of resource is hindering insurers' ability to prepare effectively."
Sheaf concluded "In our view, it is important for all insurers to devote sufficient time and resources to this aspect of Solvency II to ensure that their preparations are completed in a timely manner. In order to achieve this, insurers should undertake a gap analysis to fully understand what needs to be done. This will then enable them to put a plan in place to ensure that the work is completed in good time. Putting off Pillar 3 is no longer an option and effort is required now to ensure that all insurers meet the Solvency II reporting and disclosure requirements."