This survey provides an insight into how companies in the UK Life Insurance industry are progressing in their preparations for the arrival of Solvency II; how they will comply with the new regulations; and whether the industry has found common ground or is widely dispersed in its approaches.
- Insurers are only now starting to focus on the wider business impacts of Solvency II such as corporate structures, product design and pricing, and asset allocation strategies;
- Documentation ranks top of the implementation challenges – a common theme across all three Pillars;
- 83 percent of those using an Internal Model (IM) believe they are on track - the main challenge being the technical build;
- 54 percent highlighted Counterparty Risk as the most complicated Standard Formula stress to compute;
- ORSA is a key area of concern, ranking 3rd in the list of implementation challenges - 56 percent believe they still have significant work to do;
- Lack of guidance in some areas remains a problem and although the date change gives more time, firms urgently need clarity;
- Marked variances in the tax methodologies, particularly around the assumptions used to support deferred tax asset recognition; and
- Questions over the level of independence being achieved in model validation and preparation of the validation report.