European insurers active within international markets have some ground to make up across all pillars of Solvency II preparedness, according to the findings of a study by BearingPoint.
According to the report, Finance Transformation 3.0: Coping with increasing regulatory controls under Solvency II and IFRS 4/9, the industry's readiness for Solvency II varies between the different pillars.
Pillar 1 is best prepared with an estimated state of completion of roughly 85% across the industry. The preparation of pillar 2 is estimated at around 70%, while pillar 3 is least prepared at around 60% of respondents.
According to the report, since regulatory authorities will continue to call for changes to quarterly reporting template requirements under pillar 3, it is expected that ongoing adjustments will be needed after Solvency II comes into force in 2016.
"When I look at our findings I am a bit surprised at the overall state of readiness," said Patrick Maeder, firm-wide leader of the insurance segment at BearingPoint.
"The larger insurance companies tend to be more ready than the smaller insurance companies, but my anticipation was that the larger companies would have been at a higher state of readiness at this point," he added.
The report also found that supporting systems like accounting, controlling, consolidation and reporting tend to be generally centralised (80% of respondents) but for actuarial tasks including modeling, only 35 % use a central platform. In this context, BearingPoint suggested, several insurers are now heading towards a central solution. Treasury and Risk systems show a similar tendency.
"A centralised solution could focus on the information model and methodology or the application layer," said Maeder. "When you look at the history of insurance companies it's not a surprise that systems are decentralised given the history of insurers and the extent of legacy issues for many of them."
He added that it's still the case that when one compares insurers with banking, the insurance industry is "quite behind."
For the full report please see: http://www.bearingpoint.com/en-ua/7-10021/finance-transformation-30-coping-with-increasing-regulatory-controls-under-solvency-ii-and-ifrs-49/