Insurers fear new EU rules could hit them hard

New regulations are the biggest threat facing insurers as fears grow over the impact of the EU's Solvency II directive, according to a report out today.

The annual "Insurance Banana Skins" survey, by the Centre for the Study of Financial Innovation, found that Solvency II - the new capital rules introduced for European insurers at the end of this year - is considered the biggest single risk to the industry.

Insurers fear the rules, when added to other regulations coming in locally and internationally, could spark a new wave of compliance and cost problems at a time when the industry is already under pressure.

The poll, produced in conjunction with PwC, also identified capital requirements and the uncertain economic outlook as serious threats to the industry. Investment performance, identified two years ago as the greatest risk facing insurers, is now the fourth-biggest concern, while the implications of natural catastrophes have risen up the list following recent tragedies in Japan and New Zealand.

Philippe Guijarro, actuarial partner at PwC in Scotland, said: "While there are clearly hurdles to be crossed in the short term, not least a raft of new regulations such as Solvency II, it is crucial that the sector doesn't lose sight of the growth opportunities on the horizon."