The cost for UK insurers could be significantly higher than the estimated £300m-£400m, warns actuary
Commenting on recent press speculation that implementing Solvency II could cost UK insurers in the region of £300m-£400m over the next few years, Charl Cronje,a partner at actuaries Lane Clark & Peacock said that the cost could in fact be significantly higher.
"Apart from the direct costs of systems, staff, and consultancy advice, there will be a significant opportunity cost arising from the diversion of senior management time, from running the business to addressing Solvency II compliance.
"Partly this is driven by increasing regulatory pressure for top management tobe closely involved in the Solvency II process - regulators would like to seethe new risk management framework become a core business issue. This is a laudable goal, but it will create unavoidable tensions because there are a host of other demands on executives' time.
"A bit like the carpenter's rule of 'measure twice and cut once', if companies are to keep the costs of Solvency II manageable, it is essential that the process is started early, planned carefully, and managed well."