PwC comments on the FSA’s Solvency II conference where the regulator announced new deliverables for insurers’ Internal Model Application Process and commented on the ongoing impact of political uncertainties.
The regulator confirmed a two-stage process for model approvals, the first stage being a submission (in effect a draft application), to be followed by a formal application once regulatory decisions can be made under Solvency II rules. All firms will need to complete a new internal model evidence template, which now runs to 300 separate items, based on Directive and anticipated "Level Two" measures. The FSA signalled no change to their anticipated implementation date of 1st January 2014, though did concede that their proposed 2013 soft landing approach might be jeopardised by ongoing political uncertainties.
Charles Garnsworthy, partner at PwC, said:
“Insurers will welcome the increased clarity from the FSA of their requirements for the internal model approval process. But this late format change will require many insurers to rethink how they organise their Solvency II programmes. Many companies are likely to be concerned that their already heavy workloads and limited resources will be stretched further.
“The FSA is cranking up its pressure on firms and insurers need to prepare themselves for much closer engagement with the regulator in the run up to implementation. A number of insurers had already anticipated this increased level of activity with the FSA, but those who have not factored this into their Solvency II plans will have to considerably rethink how they use their already strained resources."
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