Accounting firm KPMG has said that the FSA's new insurer capital requirements, "will set tough standards" for general insurers that are "well in excess of European minimum standards".
Partner in KPMG's financial services practice, Hitesh Patel said: "Insurers will need to assess their capital
position carefully and in some cases may need to consider methods of raising additional capital or use their capital in a more efficient way - which could include exiting areas of business where the drain on capital resources is not sustainable in the new regime. Many insurance companies will need to develop a greater understanding of the capital needs of different lines of business they write and of operational risks."
The ABI has also come out in support of the new risk-based capital measures.
"It is right to align capital requirements to the risk profile of an individual business," said Peter Vipond, the ABI's Head of Financial Regulation and Tax. "However, the application of these new rules will have to be carefully considered, and we are pleased that the FSA will be consulting fully with the industry."
