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The report reveals:
Francesco Nagari, insurance partner at Deloitte, said: “The new agenda is leaving insurers stretched, uncertain and requiring new capabilities. The volume of new insurance rules has increased to a level not seen in decades. Compliance has cost the European industry billions of euros and most insurers expect the bill for implementing the new regulations - which include IFRS 4, Solvency II, IFRS 9, SIFI Rules and FATCA - to continue at current levels until at least 2015.
“However, the challenges are not simply about headline cost. Few compliance teams have the capability to deal with the uncertainty surrounding regulation and many insurers are adopting a wait and see approach when it comes to making business decisions. This can result in strategic paralysis, which means insurers may delay business plans such as acquisitions or disposals because they do not know how these decisions might be affected by new regulations.”
Seb Cohen, head of insurance research at Deloitte, said: “Senior executives say the shifting nature of regulation makes it difficult for insurers to make decisions and plan their businesses. This means the real cost is likely to be much greater than simply the initial expense of implementing the new rules.
“Our research indicates insurers would welcome regulators around the world working closely together to reduce duplication between each national supervisor. In Europe, EIOPA is examining this issue, but it is unlikely to affect rules from outside Europe. Companies, however, cannot wait for regulators to be more coordinated in the short term. There are tools and techniques insurers can use to help cope with these challenges and they need to create a coordinated firm-wide approach to regulation that does not hinder the formulation of business strategies.”