All general insurers must have access to appropriately skilled and technical actuarial resources to make sure that there is a full understanding of Solvency II requirements before time runs out, consultants OAC have warned.
Key to the new Solvency II regime is the requirement for general insurers to have an actuarial function to help them assess their financial resources and solvency capital requirements as well as help with the implementation of a risk management system.
However, some firms have been slow to understand what those requirements are and to implement them, Christopher Critchlow, a consultant actuary at OAC told The Actuary.
He said some insurers had gone on to implement the requirements but on an 'incorrect basis', while others were progressing in the 'most appropriate fashion'.
Those insurers that have been slow to act or are proceeding incorrectly would potentially be subject to further review and scrutiny by the Prudential Regulatory Authority and European Insurance and Occupational Pensions Authority, Critchlow said.
He added that general insures had just over six months to implement a 'robust' risk management system, fundamental to the success of an insurance business. This requirement requires insurers to assess their own short- and long-term risks and the amount of funds necessary to cover them.
Critchlow told The Actuary: 'I should imagine by the latter end of 2014 they need to be producing their Omnibus Solvency II assessments and if they are not coming out in the manner that the regulators were expecting they will be reviewed in some form or other.
'The issue with [smaller] general insurers is that there is no formal requirement to have an actuarial function. But that is different with life companies where there is statutory requirement to have an appointed actuary function holder to sign off the valuation of reserves.'
He explained that the Solvency II regime put in place a requirement to have an actuarial function irrespective of whether 'you're a life or non-life' firm.
He noted that the PRA had issued Supervisory statement SS413, which sets out what it expects general insures to be doing over the course of 2014, in regards to the establishment of the actuarial function.
'Insurers obviously have the option to appoint "in house" actuarial resource or to outsource it. However, the message needs to be that, despite delays in the past two years, we have over 18 months before the rules come into force,' he said.
'Some aspects of the regulation remain unclear and the sooner insurers confront any doubts head on the better as any points that are ignored could prove costly in the long run.'