Lloyd’s of London insurance market expects to pay £300m to implement stringent new capital requirement rules for insurers, its chairman Lord Levene (pictured) said yesterday.
Levene criticised the additional burden placed on insurers by the Solvency II rules, imposed by European lawmakers to require insurers to hold more capital to cover the risks they underwrite.
Lloyd’s said earlier this month it was on course to spend £250m preparing for the Solvency II changes.
“It’s a huge task,” said Levene, on the sidelines of meetings at Davos. “It’s costing Lloyds markets just to get ready for Solvency II £300m. It’s a lot of money and it’s a diversion of effort.”
About 3,600 European insurers will have to comply with Solvency II by I January 2013.
But firms are concerned that the requirements will tie up needed capital, divert earnings from investors to add to capital reserves, and make insurance more expensive.
“The concept behind it is good but we need to get details right and it does take peoples’ eye off the ball,” Levene added.