1 January marks the culmination of years of work and billions of pounds of expenditure for UK financial series organisations as Solvency II, the European legislation designed to prevent insurance companies from collapsing due to insolvency, comes into force.
But according to experts at Silverfinch, an organisation that has been working closely with the insurance industry and most asset managers to help them comply with the incoming legislation, Solvency II is now a bloated shadow of its former self, changed beyond recognition from the original legislation and costing vastly more to implement.
John Dowdall (pictured), Silverfinch’s managing director, says: “The legislation that comes into force on 1 January bears little resemblance to the proposal first made by the European Union some years ago. It’s bigger, it’s more expensive, it’s data intensive and there are serious questions about the ability of financial regulators to make meaningful sense of the tsunami of information that insurance companies are about to send them.
“The real test is not what happens on 1 January, but what happens in three–four months when insurance companies will have their first audits under Solvency II. That’s when we’ll find out if the industry is truly compliant and just how much importance the regulator is going to place on getting it right.”
