With the Solvency II regime set to roll out across Europe, the Bank of England (BoE) is seeking to reassure the UK’s major insurance companies over the impact this will have on their business.
From the beginning of next year, new regulations with subject insurance firms to tougher capital requirements with a views to promoting “a better understanding of the risks being taken,” according to the BoE.
The Bank has dismissed accusations that it is trying to dictate business models.
“I have said this before but I think it is worth reiterating,” said Paul Fisher of the BoE’s Prudential Regulation Authority (PRA). “The PRA believes the UK industry is in a good position, having had the UK risk-based individual capital adequacy standards [ICAS] regime for around 10 years. We are therefore not looking to use Solvency II as an opportunity to raise capital requirements across the board.
“We do, however, recognise and respect that Solvency II is a maximum-harmonising Directive with a key objective of promoting supervisory co-operation. The PRA is committed to upholding this valued objective and will implement the Directive as intended. We can’t and won’t gold plate.”
The Solvency II regulations, which will affect major insurers such as Aviva, Prudential and Legal & General, were first proposed by the European Commission in 2007 in an attempt to standardise regulations across the industry. The onset of the financial crisis created delays, as extra measures were tabled to help prevent against a future crash.
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