- Not enough board level training has been done to-date and time is running out
- Solvency II is not just a compliance exercise; can also bring significant business benefits
The majority of firms are not currently doing enough to bring their boards up to a suitable level of Solvency II understanding, jeopardising their opportunity to gain a competitive advantage and their ability to ensure regulatory compliance.
A recent report from KPMG, Bringing Solvency II alive in the boardroom, reveals that 80% of boards have received less than 15 hours of training and only 19% are planning to increase the level of training over the next 12 months.
Phil Smart, head of Solvency II at KPMG, commented: “While the exact amount of training required will vary from one firm to another, the acid test is whether the board can collectively demonstrate they have the appropriate Solvency II skills to drive forward their businesses under the new regime and the necessary understanding of the requirements. Less than 15 hours is unlikely to be enough to ensure the required level of knowledge for most organisations given the changes made to prepare for Solvency II.
“The regulators will be asking tougher questions of employees in key roles to test their understanding and application of the regime. Solvency II’s reach goes far beyond the technical teams now and the potential consequences of non-compliance could be severe.
“In addition to general compliance, the commercial benefits that effective Solvency II training can deliver should not be underestimated. A greater understanding of the business using Solvency II metrics, as well as relevant regulations, will deliver a real competitive advantage for businesses by helping inform strategic decision making particularly with regard to M&A targeting and divestment activity.”
KPMG’s report also recommends that specific Solvency II objectives be included in board members’ development plans.
Paul Brenchley, director in KPMG’s risk management team, commented: “There needs to be greater emphasis on embedding change across the entire organisation. The tone must be set from the top and organisational culture and behaviour need to be considered alongside technical requirements. For example, including Solvency II specific objectives in executives’ performance measures – and holding them accountable – will help encourage these behavioural changes. Currently less than half (44%) of firms are doing this. Our advice is that with less than 18 months to go, businesses should be looking now to incorporate Solvency II measures, were relevant, into next years’ objective setting to ‘dry-run’ them.”
On a positive note, KPMG’s report also revealed that 90% of insurers have, at the very least, started their board training with one third having rolled out company-wide training programmes. Paul Brenchley concluded: “As the final implementation date for Solvency II fast approaches, firms cannot afford to become complacent. The FSA expects a lot from the board and they must ensure they are ready to implement this change in a challenging environment.”
- Ends -
Notes to editor
KPMG’s report, Bringing Solvency II alive in the boardroom – are you doing enough, discusses the results of a survey of UK life and non-life insurers gauging how prepared boards are for solvency II.
The report is available on request.
For further information please contact
Monica Fiumara, Senior PR Manager, KPMG
Tel: +44 (0)20 7694 5674
Mobile: +44 (0)7901 105180
KPMG Press Office: 020 7694 8773
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