Nearly a quarter of insurers may not be ready by year end for Solvency II's Pillar 3 requirements, according to research.
In a survey of 61 senior insurance executives, 23% of respondents said their firms were not ready for Pillar 3 requirements. Under Solvency II, Pillar 3 requires firms to disclose details of the risks they face, capital adequacy and risk management.
The survey, entitled The final hurdle and conducted by business and financial adviser Grant Thornton, said of that 23% of respondents, 5% predicted they would not be ready before the regime comes into effect on 1 January 2016, while 18% were unsure whether they would be prepared in time.
According to the firm, the majority (93%) of executives believed the requirements were either "onerous" or "excessive". Nearly all respondents (98%) said the quantity and level of detail of the information required, along with the resources needed to compile this information, were the biggest challenges to implementing Pillar 3. In addition, 92% said reporting deadlines were either a "significant" or "moderate" challenge to the implementation.
Simon Sheaf, head of general insurance actuarial and risk at Grant Thornton, said: "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.
"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. 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."
Robert Gothan, founder of consultancy firm Accountagility, agreed the quantity and level of information required was a major challenge to firms. He said: "Solvency II has a tough reporting process."
He predicted insurers would eventually "pile on resources" to prepare for the Solvency II directive.
"I guess what will happen, as the deadline approaches, is there will be a tremendous influx of resources and people will just pile on resources to it," said Gothan. "Companies will use every trick in the book to get this business done."
Solvency II is an EU legislative system designed to harmonise insurance regulation across members states.
