LONDON, June 15 (Reuters) – The UK’s review of the European Union’s adoption of rules for the insurance sector will not increase policyholder protection, but it could increase reliance on stress tests to determine capital levels, the Bank of England said on Tuesday .
The UK wants to adapt the Solvency II rules to British insurers, which it can do now after leaving the EU.
Anna Sweeney, the BoE’s executive director for insurance, outlined the next steps in the review on Tuesday.
“In our view, the current regime in the round provides roughly the right level of protection for policyholders,” she said at a JP Morgan European Insurance conference.
“We do not pursue a zero-error regime and do not intend to further strengthen this protection within the framework of the Solvency II review,” she said.
Before the BoE makes concrete proposals for changes, it will send out a qualitative impact survey to insurers this summer.
It asks for data on the risk margin used to transfer assets and the matching adjustment that allows a company to see an immediate benefit from future returns.
The BoE will conduct its next insurer stress test in 2022 and has “aspirations” to make this regular exercise more central to setting capital requirements.
The results of the test will allow the BoE to better understand whether there are gaps in insurer resilience that need to be closed, Sweeney said.
“We intend to discuss any possible changes to our approach early next year along with the wider consultation on the Solvency II review,” she added.
Reporting by Huw Jones Editing by David Goodman
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