FSA signals move to ease red tape in Solvency II run up

Needless duplication of red tape could be eased during the 2013 run up to the implementation of Solvency II, the FSA has signalled.

The regulator’s insurance director Julian Adams told a conference organised by the regulator yesterday that the move was designed to cut costs associated with the dual running of the upcoming European directive and the existing solvency framework.

The regulator announced last month that insurers would have to comply with Solvency II by the beginning of 2014, but that they should begin implementing the directive during 2013.

The announcement sparked concerns that insurers will duplicate resources applying Solvency II and existing regulations, leading to calls for firms to be able to use the directive as a proxy for the UK’s own individual capital assessment (ICAS)requirements.

Adams said that because the Solvency I directive was due to remain in force until January 2014 “until that time we will have no latitude to waive or alter those requirements”.

But he said that the FSA had more scope in relation to ICAS. He said: “Our intention is to explore with firms possible ways of avoiding the costs associated with the dual running of an ICAS and Solvency II model, while continuing to secure a degree of policyholder protection, which we regard as appropriate and prudent.

This could include investigating whether, where we are minded to approve a firm’s model, such a model could be used to demonstrate satisfaction of some or all of a firm’s ICAS requirements.”