July 9 Most British insurers consider the
European Union's upcoming Solvency II capital rules a "necessary
evil", but are concerned about the costs of the new
requirements, according to a survey by auditor and advisory firm
Grant Thornton UK LLP.
The new rules, due to take effect on Jan. 1, 2016, aim to
better protect consumers by forcing insurers to match their
capital buffers more closely with the risks on their books.
"The sector is begrudgingly ... recognising that (Solvency
II) will bring some benefits," said Simon Sheaf, head of
actuarial and risk at Grant Thornton UK.
However, nearly two-thirds of insurers said the benefits of
Solvency II would not justify the expense incurred, according to
Measures taken in preparation for Solvency II, such as
upgrading IT systems, have cost the world's biggest reinsurer,
Munich Re, between 200 million euros and 300 million
euros ($273-$409 million) in the last decade, Frankfurter
Allgemeine Zeitung reported in February.
When asked by lawmakers this month if Britain's insurers
were in reasonable shape to meet Solvency II, the Bank of
England's director of life insurance, Andrew Bulley, said they
were "overall, as well as can be expected".
Almost all insurers said they would be able to meet the new
requirements in time, but the survey also showed that nearly
two-fifths of insurers believed less than 70 percent of their
peers would be able to do so.
($1 = 0.7331 euros)
(Reporting by Richa Naidu in Bangalore; Editing by Saumyadeb