Lloyd's of London expects to spend £300m preparing for the European Union's new Solvency II capital rules for insurers, the chairman of the insurance market said.
"It's a huge task," said Peter Levene, Lloyd's of London chairman told Reuters Insider. "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."
Lloyd's said earlier this month it was on course to spend £250m preparing for the Solvency II rules designed to ensure that insurers hold capital in proportion to the risks they underwrite that come into force in 2013.
Some insurers are worried the new regime could result in an unwarranted ratcheting up of capital requirements, eroding profits and pushing up prices for customers.
"The concept behind is good but we need to get details right and it does take peoples' eye off the ball," Levene told Reuters on the sidelines of the World Economic Forum in Davos.
Many insurers such as Allianz and Axa say they have big doubts about the rules, while reinsurer Munich Re has backed a five-year phase-in.
The cost of adopting Solvency II for the industry as a whole is likely to be "significantly higher" than the European Commission's estimate of 3bn euros (£2.5bn ), accountants PwC have said.
City A.M. Reporter