NU Online News Service, Feb. 23, 2:40 p.m.EST

With Solvency II scheduled to come into force Jan. 1, 2013, U.S.companies must prepare for changes in capital position, enterpriserisk management, product strategy, resources, risk culture andtechnology, according to a Deloitte study.

While Solvency II is a European Union initiative, the report,"SolvencyII from a U.S. perspective,"  by Howard Mills,director and chief advisor, Insurance Industry Group, Deloitte,notes that insurers globally are expected to feel the directive'simpact.

The report states, "Initially, U.S. subsidiaries with parentcompanies in the EU will realize impacts in areas ranging fromcapital position and enterprise risk management (ERM) to newproduct development and other strategic areas.

"In the longer term, impacts will be seen throughout the U.S.industry as even U.S.-domiciled companies work to enhance theirrisk cultures and to shore up their ERM information technologycapabilities to keep pace with industry-leading practices andrating agency expectations."

Outside the EU, regulatory agencies are seeking to gain SolvencyII equivalency, Deloitte said. The National Association ofInsurance Commissioners (NAIC) and the International Association ofInsurance Supervisors (IAIS) in Switzerland are each working onframeworks and standards that share similarities with Solvency IIin terms of emboldening regulatory oversight, according to thereport.

U.S. companies should plan for changes in capital adequacy, riskmanagement and disclosures, all of which will become a part ofstrategic decisions going forward, Deloitte said.

Deloitte added that longer-term impacts on risk culture areexpected to increase. "Business performance and day-to-daydecision-making will be done on a risk-adjusted basis, with riskexposure being monitored against risk appetite," the reportstates.

According to the study, a significant impact will also be seenin the area of technology, "as transformation of risk functioncomes into play, demanding new architecture that is capable ofproviding automated, timely risk analytics for use in strategicdecision-making.