Thursday, 14 April 2011

More from the Deloitte EIU survey

Thanks to Gillian at Deloitte for pointing it out - the survey on Sol II preparation trends went live today!

Some standard fare in there (bearing in mind it was 60 companies polled, split around 50/50 life/non-life)
  • Some smaller companies yet to commence board briefings
  • Implementation planning is currently priority 1
  • Increase in the number of companies considering restructure (from subs to branches)
  • Shift in product lines or pricing anticipated in order to shift the risk of guarantees on to policyholders (which doesn't sound like the desired outcome at a political level)
  • Two thirds introducing new risk mitigation techniques (I guess more reinsurance)
  • IT upgrade highlighted as one of the biggest costs - as Pru showed us today, shifting things from legacy to warehouse is a sharp shock, but it is surely good for the industry to do this work, even if it is at the point of a gun
  • Areas of most concern are sponsorship and engagement and clarification (or lack of) from FSA/EIOPA

And some more startling aspects;
  • One non-life company has no knowledge at all of Sol II at board level!
  • Despite 80% of respondents going for full or partial internal models, Data Quality and use test featured low on the list of priorities (some guys will have a pretty busy 2012 if they are leaving this till late!)
  • One of the 4 largest respondents is considering relocation (my monies on Pru)
  • Larger insurers were budgeting for up to £75m - as my earlier posts highlighted, Old Mutual, Aviva and Pru have already laid down more than 50% of that in 2010 - lets hope for their sakes that was the data warehousing spend, and it's all finished!
One can take a bit of comfort from other companies travails, but it is much more significant to see where the industry has its priorities right now, and I fear that if it isn't in accurate data and improved governance, we could be missing a trick

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