# Post-Brexit insurance reform clear before December, says BoE’s Woods
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Bank of England assures insurers over Solvency II reform timeline
Meta Description: The Bank of England is addressing concerns among insurers over the delay in implementing long-awaited changes to Solvency II rules, aiming to provide clarity
URL: https://financedigest.com/post-brexit-insurance-reform-clear-before-december-says-boes-woodshtml

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By Huw Jones

LONDON (Reuters) -The Bank of England sought on Monday to allay fears among insurers that it was dragging its feet over a long-trailed and disputed reform of their capital rules, saying a “very good sense” of the changes would emerge well before December.

Changing the rules, known as Solvency II, has become a test of how far Britain is ready to change regulations inherited from the bloc to boost the financial sector.

The industry has long called for a speedy reform to [unlock billions](https://www.financedigest.com/cryptoverse-ethereum-upgrade-to-unlock-33-billion.html "Cryptoverse: Ethereum upgrade to unlock  billion") of pounds from capital buffers to invest in infrastructure and boost the sector’s global competitiveness.

Insurers point out there have been, however, no major changes despite Britain having left the EU’s legal orbit more than two years ago, and [regulators being given a new remit to buttress growth](https://www.financedigest.com/understanding-asia-pacific-insurance-regulation-is-key-to-growth-says-aon.html "Understanding Asia Pacific insurance regulation is key to growth, says Aon") and the financial sector’s competitiveness.

In the meantime, the EU is much further down the road in updating Solvency II.

The BoE has clashed with the sector and the finance ministry over how far to [ease the rules](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden"), citing the need to protect policyholders.

On Monday BoE Deputy Governor Sam Woods, who heads [banking and insurance regulation](https://www.financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sources.html "Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources"), sought to ease frustration over the pace of change.

[“Discussions with colleagues in the Treasury about precise timings](https://www.financedigest.com/why-now-is-the-time-to-implement-a-time-saving-business-model-encouraging-team-members-to-discuss-their-challenges.html "Why now is the time to implement a time saving business model, encouraging team members to discuss their challenges") are ongoing, but at this point our broad expectation is that we will publish a first consultation on some of the topics above in June, followed by a second consultation … in September,” Woods told the Association of [British Insurers annual](https://www.financedigest.com/british-property-portal-rightmove-hikes-dividend-after-annual-profit-jump.html "British property portal Rightmove hikes dividend after annual profit jump") dinner.

We are also mindful that for some changes, [firms will need advance notice to prepare](https://www.financedigest.com/uk-watchdog-warns-crypto-firms-to-prepare-for-advertising-rule-change.html "UK watchdog warns crypto firms to prepare for advertising rule change"), but we expect that these consultations will give firms a good sense of how the detailed regime will operate,” Woods said, adding firms will have a “very good sense” of the changes well before the end of 2023 to adapt investment plans.

If parliament supports the [government’s plan for a large cut to the risk](https://www.financedigest.com/5-challenges-to-overcome-in-governance-risk-and-compliance-magazine.html "5 Challenges to Overcome in Governance, Risk and Compliance-Magazine") margin of insurers, then the Bank would “move on from the debate and into implementation”, Woods said, referring to a mandatory buffer to help move a failing insurers’ policies to another insurer.

The [Bank would not use new powers to “reverse engineer” disputed changes to the so-called ‘fundamental spread’ or discount on how much insurers](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse") can cut capital requirements.

“Let me say very clearly and simply that we will not do this,” Woods said.

(Reporting by Huw Jones;Editing by Mark Heinrich and Alison Williams)


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