Underwriters at Lloyd’s have been told they need to increase their pace if they are to meet the demands of the market when it comes to preparing for Solvency. II
Broker and adviser Towers Watson has warned he clock is ticking for Lloyd’s insurers and the market needs to move into a higher gear following the publication of Lloyd’s 2011 Solvency II implementation timetable.
Mike Wilkinson, management consultant at Towers Watson said, “With seven parallel Lloyd’s workstreams, each with overlapping and challenging deadlines, agents will need to ensure resources are highly focused on delivery but at the same time ensure that the complexities of Solvency II are fully understood and integrated into a coherent framework.”
He added with two months of the year already gone, Lloyd’s syndicates face an intensive period of activity if they are to meet the “demanding Solvency II implementation schedule” for 2011.
Following consultation with the FSA and the market, Lloyd’s has issued its Solvency II guidance for 2011. The objective is to enable Lloyd’s to submit an overall Lloyd’s Internal Model (LIM) application by 31 January 2012. The guidance notes include an intensive schedule of activity in 2011 for managing agents and syndicates from March through to December, to drive the delivery of the end product.
Before the end of the year, each managing agent must confirm that they are sufficiently ready to enable Lloyd’s to submit its Solvency II internal model application in January 2012. But to do so, they must also demonstrate to Lloyd’s – and in many cases the FSA – that the many deadlines from March through to December are consistently being met.
Towers Watson warned that with the added threat of sanctions for not meeting key objectives, many agents’ existing resources will be stretched, in particular those that are already behind Lloyd’s current target positions. As many of the detailed regulatory requirements are still to be finalised, agents will also need to be sufficiently well prepared to be able to respond rapidly to Lloyd’s submission templates as they are published.
Mike Wilkinson added: “In only eight months time, each syndicate will need to submit a full and robust Solvency Capital Requirement (SCR) on a Solvency II basis. But agents will also need to be careful not to shift their focus away entirely from the qualitative aspects as a robust SCR is as much about process, validation and integration into the business as it is the technical calculations. This will be crucial for internal model approval.”