Provisions to allow more capital into the insurance industry will be implemented by the end of the year.

The rules on insurance special purpose vehicles (ISPVs), a more flexible approach to investing capital, are to be in place by December following two months of industry consultations.

An FSA spokesman confirmed that consultations on implementing the Reinsurance Directive would close on 20 August before a "period of reflection".

The proposals form part of a wider consultation on the implementation of the EU Reinsurance Directive, which must be enforced by 10 December 2007.

FSA director for wholesale firms Thomas Huertas said recently: "ISPVs will give insurers access to more diverse sources of capital."