Fewer than half of European insurers have a dedicated capital management department, according to Deloitte’s 2016 EMEA Capital Management in Insurance Survey.
The findings come as the EU’s Solvency II regulatory regime became effective on 1 January 2016.
Currently, 60% of capital management departments or committees report to CFOs. However, Deloitte’s research shows many departments perform related capital management activities, potentially blurring the lines of responsibility.
Andrew Holland, Deloitte’s EMEA Solvency II co-leader, said: "Our research shows capital management is not organised or governed in a coordinated way in insurers across Europe. Even where insurers have such a department, many depend on separate functions such as the risk, actuarial and investment departments.
"Solvency II requires a technical skillset, and there is heavy reliance on these areas. Without a joined-up view across all of these areas, there is a significant risk insurers could miss the whole picture. Strong and appropriate governance is needed to support a holistic view of capital management activities."
Deloitte’s research showed capital management will be a focus in the next five years for 90% of EU insurers, with an emphasis on how capital is sourced, used and maximised. About half of respondents have considered potential strategies, but they are still in their early stages.
Claude Chassain, Deloitte’s EMEA Solvency II co-leader, commented: "We expect to see a shift where companies develop less capital intensive products and a greater emphasis on reducing risk margins. This could lead to a diverse range of capital strategies coming out in the months ahead."