European Insurers Expect Modest Cost for Solvency II Compliance, Accenture Survey Finds

European Insurers Expect Modest Cost for Solvency II Compliance, Accenture Survey Finds

More than three-quarters of large European insurers expect to spend less than €25 million through 2012 on Solvency II compliance, with more than half of those expecting to spend less than €5 million, according to results of a survey released today by Accenture (NYSE: ACN). Specifically, one-third of the insurers surveyed said they expect to spend between €5 million and €25 million on such compliance, with an even greater amount – 43 percent – saying they expect to spend less than €5 million.

The European Union’s Solvency II directive calls for a common set of solvency regulations for insurers across Europe by 2012, including the enactment of new rules regarding the levels of capital that EU insurers must set aside to cover their combined risks and liabilities.

Considering Solvency II in the larger context of strengthening their enterprise, three-quarters (75 percent) of respondents said they believe that their compliance investment will support their business needs. More specifically, 94 percent said they believe it will increase stakeholders’ confidence in risk control and management, 88 percent said they expect it to increase stakeholders’ confidence in the insurers’ capital reserves, and 85 percent said they expect it to provide enhanced capital management.

“Insurers expect to spend far less to comply with Solvency II than banks expected to spend to comply with Basel II requirements[1],” said Eva Dewor, a senior executive in Accenture’s Insurance practice. “While achieving Solvency II compliance with the lowest cost possible might be an acceptable strategy for some insurers, they should be aware that a compliance-only approach, without the necessary investment in risk management for certain core business processes, won’t enable them to reap the benefits they expect or to anticipate crisis situations.”

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