Government pledges industry support

The government will continue to support the insurance industry ahead of the implementation of Solvency II, it said in today's Budget.

Chancellor Alistair Darling also pledged to review the UK tax rules following discussions with the industry.

"The Solvency II Directive aims to develop an EU-wide system of prudential regulation for insurers and reinsurers. It will introduce a stronger and more sophisticated risk-sensitive approach to capital adequacy and supervision than current Solvency I requirements, reducing the likelihood of an insurer failing, and enhancing policyholder protection," the government said.

It continued: "These proposals will necessitate changes to the UK tax rules. Following initial discussions with the industry, the government launched a consultation on 10 March to capture views from the industry and others on some key aspects of the future framework, and looks forward to those responses. More broadly, the government continues to provide support for the UK insurance sector by working to ensure that its interests and concerns, including those relating to the impact on annuities, are heard."