Almost half of European insurers will not be ready for SolvencyII by January 2014, reports Ernst & Young, but given an extrayear, 90 percent say they will be ready by Jan. 1, 2015, the dateproposed by the European Union.

Out of 160 large insurance companies queried by Ernst & Young's European Solvency II Survey, 70 to 90percent of British, Dutch, Greek, Polish and Spanish insurers haveassessed that they can comply before 2014. However, 60 to 70percent of Belgian, French, German and Italian insurers say theyare not keeping up.

For these less-prepared countries, says Martin Bradley, thesurveyor's partner in financial services and global Solvency IIlead, the main compliance issue rests atop Pillar Three of therequirements.

Up to 80 percent of insurers have made little progress on thisthird Solvency standard, which deals with data transparency oncorporate obstacles, risk management strategies and capitaladequacy.

Bradley says, “We know from those organizations that havestarted their Pillar Three projects, the emerging data deficienciesand significant process, control and IT challenges present anambitious target to achieve within the currenttimeframes.”

Readiness for Pillar Two, or the governance and supervision,review and intervention guideline is also up in the air. Only 17percent of insurance companies have formally assessed theirrisk-management systems and determined their effectiveness onpotential outcomes.

“There is a risk that respondents have overestimated theirreadiness for Pillar Two, perhaps by placing greater emphasis onthe existence and nature of a component than on the effectivenessof their risk management systems,” continues Bradley.

Data and IT readiness are also trouble areas, with nearly 69percent of insurers saying they've met some or none of thedata-management requirements, but many companies are strugglingdata integration standards across multiple partners.

Pillar One, or management of capital requirements, however, ison track, with seventy percent of companies focusing on capitaloptimization strategies during 2013.