UK ready for Solvency II

The UK industry is well prepared for the reforms to capital rules, the Association of British Insurers has said.

After ten years of preparation and a GBP3 billion investment from the UK industry, insurers and reinsurers will be ready to implement from the beginning of 2016.

More than 400 UK firms are expected to be within scope, and over 3,200 pages of Solvency II regulatory text will be published, which firms must comply with, by the European Commission and the European regulator, EIOPA.

Under Solvency II, firms will have to hold enough capital to survive a one in 200-year stress on their balance sheet.

Around 19 UK firms received approval from the Bank of England to use their own internal model to calculate their capital requirements, three times more than any other EU state. More UK firms will be using internal models as part of insurance groups based elsewhere in the EU.

ABI director general Huw Evans said: “The UK industry has supported the objectives of Solvency II since the beginning and invested significant time and resources to ensure it works as intended for the market. With firms now having confirmation about their internal models, the industry is well prepared to transition to Solvency II in January.”