UK insurers capital won't rise under new EU rules, says BoE

Paul Fischer, the Bank of England (BoE) executive director for insurance supervision, said European Union (EU) rules to ensure stability in the market will not be an excuse for UK regulators to step up capital requirements for insurers.

From 2016, the Solvency II rules will aim to ensure Britain’s insurance companies such as Prudential and Aviva hold enough capital to meet their financial commitments even in the event of a financial crisis.

"The PRA believes the UK industry is in a good position," Fisher told a Westminster Business Forum conference.

"We are therefore not looking to use Solvency II as an opportunity to raise capital requirements across the board. We can't and won't gold-plate."

Fisher dismissed suggestions that Britain could adopt a stricter approach than the EU when it came to insurance companies, adding the UK insurance market was "probably about right" in terms of capital levels.

The BoE official added that European countries will find the rules more challenging than Britain, as they’ll have to raise their capital levels to close the gap with the UK.