Insurer’s Pillar 3 Preparedness for Solvency II
Snap Survey of EMEA Insurers Pillar 3 Preparedness
Sixty percent of firms are on track with their preparatory measures, but less than twenty percent are close to achieving the optimal level of operational readiness.
Survey of Solvency II Pillar 3 Readiness at 70 European Insurers – Q1 2015
This survey of Solvency II Pillar 3 readiness at 70 European insurers in 13 European countries suggests that significant work remains. It reveals that while 60 percent of firms are on track with their preparatory measures, less than 20 percent are close to achieving the optimal level of operational readiness. Highlights of the report include:
•In 39 percent, the Finance function is sponsoring the pillar 3 project.
•36 percent are delivering a tactical pillar 3 solution, with 33% choosing to go direct to their strategic solution.
•65 percent are at the Build, Test or Implementation stages of project lifecycle.
•60 percent are “on track” for the preparatory measures plan.
•20 percent are close to being “fully operational” for pillar 3.
•31 percent have selected a pillar 3 specific IT solution.
The attached infographic highlights a number of key thematic priorities for European insurers and explains why the focus is now turning to Pillar 3. Interestingly, many of the European Insurers in our survey have invested significantly and made considerable progress on Pillar 3 projects, particularity on the business and IT requirements and solution design, however a great deal of effort remains to completely transition from project to business as usual and in doing so to achieve full operational readiness.
Key highlights from our snap survey:
- In Q2 2014, we independently assessed the Pillar 3 project status and operational readiness at 34 insurers across 7 European countries
- This reflected a broad spectrum of European insurers in terms of geography, size and lines of business.
- Typically, the CFO / Finance function is the key sponsor and driver of the Pillar 3 project.
- Although, the majority of Pillar 3 projects in our survey were well progressed, typically at Design or Build stages, we estimate that a large majority of European Insurers may be only at a Gap Analysis or Requirements stage.
- In terms of the delivery approach, most firms will either initially implement a tactical solution only or implement both a tactical and strategic solution in parallel.
- Based on our assessment, over half of in-flight projects are either ‘at risk’ or ‘behind schedule’ reflecting the scale and complexity of the Pillar 3 challenge
- Our assessment of the main areas of challenge is the speed of production of the Economic Balance Sheet & SCR: while organisation and processes have been in place for dry runs, few insurers are in a position to deliver the key QRTs within the target timeframes