Majority of Insurers Still in the Dark on Key Solvency II Requirements, Finds Industry Survey

LONDON, England, May 24 -- Willis Towers Watson, an advisory, broking and solutions company, issued the following news release:

Insurers have revealed in a survey by Willis Towers Watson the extent to which significant uncertainty remains in the industry concerning the approach to key Solvency II requirements since the regulation came into force on 1 January 2016.

Of the insurers who took part in the survey of actuarial functions, 80 percent agreed there remains considerable uncertainty regarding regulatory requirements affecting the underwriting opinion in particular. However, 82 percent are yet to seek any external advice to help address this lack of clarity. The findings also showed that a significant number of respondents (13 percent) do not consider the underwriting policy or process when producing the underwriting opinion which, according to Willis Towers Watson, should be a fundamental step when producing an opinion.

"The lack of clarity around such a central Solvency II requirement is a major concern as underwriting policies directly impact an insurer's performance, underlining the need for better guidance," said Tammy Richardson, Managing Director, UK P&C Leader, at Willis Towers Watson. "The findings also reveal underwriting as an area where the actuarial function could be adding more value by helping to produce and assess the overall underwriting policy framework and providing independent challenge."

Willis Towers Watson conducted the comprehensive survey of 39 property and casualty (P&C) insurers in the UK, with a combined underwriting value of over pound sterling10bn of premiums and over pound sterling24bn of reserves in 2017, in order to gauge progress made by the market in dealing with the Solvency II actuarial function requirements since the regulation came into effect two years ago.

In calculating their technical provisions, survey respondents found meeting the reporting timetable to have been the biggest challenge by far, with over 60 percent of respondents identifying this as an issue.

"With IFRS 17 fast approaching, timetables will continue to be squeezed and the pressure on insurers will intensify," said Sanjiv Chandaria, Actuarial Function Product Leader at Willis Towers Watson. "In order to meet these challenges, insurers will need to develop more efficient processes primarily through the use of the latest Insurtech software and technology which will also free up scarce resources to focus on adding the most value."

When asked where the actuarial function should focus on adding value in the future, 64 percent of respondents pointed to the need for improved efficiency of processes and calculations in order to meet regulatory requirements, most likely driven by current reporting timetable challenges.

"Many calculations are still predominantly spreadsheet based which is unlikely to help meet reporting timescales," said Sanjiv Chandaria. "One way that current processes can be made more efficient is through the use of workflow management tools to integrate various tools, support better governance and enable automation. We're seeing a real push in the market towards the use of such tools, as well as robotic process automation."

"In order to make the best use of the latest technologies and software, however, a clear understanding of the regulatory requirements is an essential first step before implementing a more strategic approach to address today's challenges of speed, frequency and cost."

About Insurance Consulting And Technology

Willis Towers Watson's Insurance Consulting & Technology business has over 1,200 colleagues operating in 35 markets worldwide. It is a leading provider of advice, solutions and software - primarily to the insurance industry. Its consulting services help clients manage risk and capital, improve business performance and create competitive advantage - by focusing on financial and regulatory reporting, enterprise risk and capital management, M&A and corporate restructuring, products, pricing, business management and strategy.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 40,000 employees serving in more than 140 countries. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas -- the dynamic formula that drives business performance. Together, we unlock potential.