UK insurance companies were yesterday granted more time to change their internal structure ahead of the start of new Solvency II regulation in 2014.
The Financial Services Authority pushed back the deadline for insurers to seek its approval for their proposed new internal models from May 2012 to mid-2013.
Its decision comes after European regulators bowed to industry concerns that they had too little time to prepare for the changes, and delayed Solvency II’s start date by a year to January 2014.
The FSA billed its change as a compromise that “balances what we need to do to discharge our regulatory obligations and bring in the new regime, with the needs of the industry”.
The change will give the UK’s insurers more time to prepare for Solvency II, which will force them to hold more regulatory capital against risks.
Insurers that want to have a new, unique internal structure approved by the FSA can send it their applications from 30 March 2012 to mid-2013.
But advisory firms said the change could lead to a slowdown in preparation for the new rules.
“While certain elements of a delay would be welcome, nobody wants a loss of momentum as insurers have been working towards Solvency II for many years and are eager to start embedding it into their businesses,” said PwC insurance partner Jim Bichard.