The Prudential Regulation Authority (PRA) won't be using the Solvency II directive as way to raise capital requirements, a conference was told.
Paul Fisher, executive director at the PRA, said the UK insurance industry was in a "good position", adding: "We are therefore not looking to use Solvency II as an opportunity to raise capital requirements across the board."
Speaking at a conference on the future of the UK insurance sector, organised by the Westminster Business Forum, Fisher said the directive would introduce "greater transparency, a level playing field through greater EU-wide co-operation, greater co-operation arrangements between European regulators, transformed data collection and analytics, a greater emphasis on high-quality governance and, above all, a more risk-sensitive regulatory framework".
Fisher said the directive would be "going live in less than 12 months". He added: "Transposition into the UK rulebook is on the way, and we will be open for applications for internal models, matching adjustments, or other approvals from 1April."
He continued: "The new regulatory regime will not look to fix firms' business models to be identical, nor to restrict the level of innovation across the market. Rather, Solvency II seeks to promote a better understanding of the risks being taken, allowing insurers to make informed decisions."
He said: "Our approach has been, and will continue to be, proportionate in our supervision. It is not the PRA's role to make sure no insurer fails. However, we are concerned that any failure is orderly and manageable."
Fisher said Solvency II was a "maximum harmonisation directive", restricting how it can be transposed, and that "we can't and won't gold-plate".
He stressed that Solvency II was a top priority for the PRA. "We are now well and truly into the implementation phase."
Bruce Porteous, investment solutions director at Standard Life Investments, said Solvency II would result in "more harmonisation across Europe". He said: "We are seeing some markets with similar models. For example, China, Japan adopting their versions of Solvency II, which are quite similar to the EU version."
Monica Woodley, editorial director at The Economist, said she noticed an "evolution" of concerns firms had with the Solvency II directive.
In a study Woodley's team conducted over the past four years Woodley said that in 2012 one third of businesses were concerned with their ability to meet the requirements, but she added: "Now they are confident of complying with Solvency II."