Friday, 1 June 2012
Insurers planning to re-price products due to SII rises to over a third-survey
Over one third of UK commercial insurers plan to re-price their products in the run-up to Solvency II, according to a yearly survey by business advisory firm Deloitte. 36% of firms now say they will do so, up from 19% last year.
Rick Lester, lead Solvency II partner at Deloitte
At the same time there has been a fall in the number of insurers surveyed that plan to restructure their business—down to 23% from 47% in 2010.
Only 8% of companies said they are more likely to change their product mix as a result of the capital adequacy regime, according to Deloitte figures.
Rick Lester, lead Solvency II partner at Deloitte, said: “This year’s survey has identified interesting developments in insurers’ approaches to Solvency II and many have reviewed the way it will be implemented. In past surveys insurers have talked of the need to restructure and reorganise their business; now they are analysing the risks they run and reviewing the amount of capital they need to write these risks, and adjusting their pricing and product mix accordingly.
“By adjusting their product mix, insurers are able to optimise the diversification of the different risks in their portfolios. This may lead some companies to consider acquiring books of business while others may withdraw from some parts of the market. We’re also seeing increasing use of reinsurance and hedging mechanisms across the industry to lay off more capital-intensive risks,” he concluded.
The survey was based on responses from 60 UK-based insurers. Respondents covered all types of business from smaller firms through to large insurance groups.