The impact of Solvency II on insurers is drawing a mixed response from the insurance industry and ratings agencies.

The Association of British Insurers (ABI) has questioned the wisdom of the European Insurance and Occupational Pensions Authority (EIOPA) running a stress test during the implementation of Solvency II.

The test will be run in co-operation with national supervisory authorities in the European Union until the end of May.

It will be aimed at the European insurance industry and will include a minimum of 50% of insurance companies per country measured by gross premium income. 

EIOPA expects to publish the aggregated results of the exercise in July.

ABI Director of Financial Regulation and Taxation Peter Vipond says the test is a distraction the British insurance industry does not need.

“The industry is currently under great pressure to implement Solvency II,” he said. “Rather than demand stress tests on the basis of a yet-to-be-agreed framework, it would be better to focus on finalising the proposed rules and helping the industry put the infrastructure in place to make them work by 2013.”

Mr Vipond says there are fears many insurers’ technical resources will be stretched as they are preparing to run internal Solvency II models at the same time as the test.

Meanwhile, ratings agency Fitch believes the impact of Solvency II on European insurer’s capital positions will be less significant than previously thought.

Based on the EIOPA fifth impact study for Solvency II, Fitch says the survey shows European insurers have adequate capital levels, although some life insurers may have to find more capital to meet the requirements.

The EIOPA report found European insurers have €395 billion ($548 billion) in excess of the regulatory solvency requirements and €676 billion ($939 billion) to meet the minimum capital requirements.

The Solvency II capital requirements come into effect globally on January 1, 2013.