Insurers are missing out on the chance of generating a return on their investment in preparing for Solvency II, according to a new report by Towers Watson.
The report outlines the need for insurers to move on from just carrying out risk measurement, to embedding a culture of risk management. This way they can see lasting benefits from their investment in Solvency II, which the FSA estimates to be £1.9 billion in the UK alone.
Naren Persad, a director in the risk consulting and software division of Towers Watson, says that firms have so far concentrated on the quantitative aspects of calculating the Solvency Capital Requirement and the QIS exercises.
"However, an improved actuarial model for calculating risk exposures is of limited value if the culture within an organisation does not facilitate understanding and use of the model to improve risk management,” he says.
Solvency II, Towers Watson, FSA