Frustration within the insurance industry in the South East over the introduction of Solvency II is at an all-time high, according to new research from leading business and financial adviser Grant Thornton UK LLP.
A majority (82%) of those surveyed now believe that the principles of Solvency II have been ‘ruined’ by its implementation while 89% believe that as currently envisaged it is ‘too complicated’.
The study, which was undertaken with senior executives in the non-life insurance sector, also revealed that only one in four respondents believe that Solvency II is the most appropriate way to run their business.
Compared with the results of Grant Thornton’s 2009 survey, there is a clear increase in frustration due to both the lengthy implementation process and the perceived complexity of Solvency II.
The percentages of respondents agreeing that Solvency II is a ‘box ticking exercise’ and ‘more red tape from Brussels’ have increased by 425% and 300%, respectively, since the 2009 survey.
Simon Sheaf, General Insurance Practice Leader at Grant Thornton UK LLP, commented, “It is clear that the perceived problems with Solvency II are with the implementation since, although 99% of respondents thought that the principles behind the new regime were good, 82% felt that those principles had been ruined by the complexity of the implementation. Regulators and supporters of Solvency II should be very concerned by the market’s reaction and it is vital that they now effectively promote the benefits of the new regime and persuade the market of its usefulness.”
“With this level of negativity and the latest significant delay to implementation, it would be all too easy for insurers to take the opportunity to halt their preparations. However, we would caution against this,” continued Sheaf. “There is still a significant amount of work to do and it is best that firms begin to tackle it as soon as possible. Although some minor details of the new regime are expected to change between now and the final implementation date, the structure as currently envisaged will not change substantially. If insurers lose momentum at this stage, it is going to be far more difficult and far more costly for them to pick up the pace later.”
