Europe's insurers spent as much as €9bn keeping pace with a barrage of regulatory changes imposed on the industry in the years following the financial crisis, according to a report by Deloitte.
Directives such as Solvency II, which requires European Union (EU) insurance companies to hold more capital, and FATCA, a US initiative obliging institutions to disclose their American clients, cost the 40 largest businesses some €200m each, the report found.
This left insurers "stretched, uncertain and requiring new capabilities", said Deloitte insurance partner Francesco Nagari.
He added that costs are expected to continue at current levels until at least 2015, but warned that "the challenges are not simply about headline cost".
"Many insurers are adopting a wait and see approach when it comes to making business decisions. This can result in strategic paralysis, which means insurers may delay business plans such as acquisitions or disposals because they do not know how these decisions might be affected by new regulations."
Deloitte's research found that insurers would welcome a closer alignment of regulators around the world to avoid duplications between national supervisors.
However, Deloitte head of insurance research Seb Cohen said companies cannot wait for regulators to be more co-ordinated in the short term, but must work on their own approaches instead.
"There are tools and techniques insurers can use to help cope with these challenges and they need to create a co-ordinated firm-wide approach to regulation that does not hinder the formulation of business strategies."
Some frontrunning firms have found ways to improve collaboration and integration across regulatory and compliance-related teams, while others improved their regulatory intelligence, or data work, Deloitte suggested.
Deloitte's research is based on interviews with senior leaders, strategic decision makers and business planners at 13 EMEA-based insurance companies, representing one third (31%) of the top 40 European insurance firms. Interviews were conducted between August and December 2012.
