The Financial Services Authority (FSA) is satisfied that the insurance industry is meeting its minimum solvency requirements.
Chairman Howard Davies, speaking at the FSA's annual meeting today, said that though the equity markets had been extremely volatile in recent weeks, the majority of life insurers and individual firms had passed the regulator's resilience test.
He said: "We continue to be satisfied that the insurance industry is meeting the minimum solvency requirements. Of course it is bound to be the case that the weak equity markets will affect firms with a large proportion of shares in their asset base.
"We are working with firms to ensure that all their actions are taken in the best interests of policyholders."
He emphasised that the regulator cannot "prevent markets falling" and nor does it "aim for a zero failure regime".
"But that does not mean we are powerless. We can, through our prudential controls, help to build a financial structure which can withstand pressures and strains.
"And, through our behind-the-scenes work with individual institutions, we can head-off particular problems, and resolve others, as, or even before, they arise," he said.
