Insurance companies in Malta confirmed that they comply with all the preparatory guidelines for Solvency II, except for two reporting guidelines due to the national specific supervision of protected cell companies.
The companies were surveyed by the Malta Financial Services Authority, as the national authority for this exercise.
European insurers have two more years to prepare for the Solvency II requirements. The Preparatory Guidelines for Solvency II, which came into effect in January, are intended to ensure a harmonised phased-in approach across member states in these two years building up to full implementation.
EY performed a survey of 170 European insurance companies across 20 countries to assess the level of preparedness for Solvency II in 2013. The findings reveal a consistently high state of readiness to implement the Pillar 1 on balance sheet and fulfill most of Pillar 2 on systems of governance; however, Pillar 3, the reporting requirements, still presents a major challenge.
Nearly 80 per cent of European insurers expect to meet Solvency II requirements before January 2016, according to EY’s European Solvency II Survey 2014. However, nearly 85 per cent of respondents see room for improvement in the effectiveness and/or efficiency in meeting Pillar 2 requirements.
Martin Bradley, EY’s global insurance risk and regulation leader, said: “Postponing the Solvency II regulatory deadline to 2016 has bolstered insurer confidence that they can meet the requirements in the timeframe.
“However, as companies become more realistic about their implementation readiness, it is clear that some are less prepared than they had expected. Many simply delayed their plans by at least one year, which might cause them issues now. While insurers are sending a strong message that they are seeking to improve their risk management effectiveness, they have a long way to go in terms of reporting, data and IT readiness.”
Almost 76 per cent of respondents say they have yet to meet most or all Solvency II reporting requirements – only a marginal improvement compared to 80 per cent in 2012.
“The level of implementation readiness has made little progress since 2012. Uncertainty in implementation and timing delays may explain the lack of progress but it is now critical to accelerate these projects in 2014,” Mr Bradley added.
“Given the current status, the reality for many is that the 2015 transitional reporting will need to be done largely on a manual basis.”
Data and systems readiness for Pillar 3 continues to lag behind Pillars 1 and 2. Only a quarter of insurers have selected or designed a system to meet Pillar 3 requirements.
While the overall frequency of interaction with regulatory bodies is considered largely adequate, insurers expect more in terms of support in the interpretation of regulatory requirements (79 per cent are not satisfied) and in terms of the amount and quality of feedback on company-specific implementation (75 per cent are not satisfied).