It comes as the London company market urged the UK’s regulator the Financial Services authority not to place an additional burden on the European regulations and those of Solvency II or risk leaving London as a disadvantage.

In terms of the latest issuance by CEIOPS Phil Smart, KPMG’s head of Solvency II in the UK said: “These papers define some of the fundamental building blocks of the Directive and how the regime will work in practice.  The sheer weight of documentation (over 1,000 pages), represents a significant challenge for insurers who will need to act quickly to familiarise themselves with the proposals, assess the business implications and refine their implementation plans accordingly.”

The areas covered by those papers include additional detail on the calculation of insurance liabilities, calculation of the standard formula solvency requirements and eligibility of capital.  Of particular import are the papers relating to the groups regime and criteria for Internal Model pre-approval as candidates for early consideration by insurers. 

“The loss of group support from 2012 was a blow to many insurers who were keen to see a reduction in the level of capital locked into each insurance entity within a group. As a result, all insurers will now need to consider their optimal structure in a Solvency II world,” Smart said. But he added a caution for those considering redomestication outside the EU.  “At this stage, there is no paper explaining how equivalence of overseas regimes will be assessed and this could have a significant bearing on the restructuring plans of some groups.”

The International Underwriting Association has also urged the FSA not to gold plate Solvency II requirements amid fears that such a move would leave London threatened as a global financial centre.

In its eight-page response to the Turner Review, set up after the onset of the banking crisis, the IUA says the FSA’s existing  ICAS regime and the future Solvency II regime already provide robust frameworks for the regulation of insurance and reinsurance.

“We do not believe that the re/insurance industry poses a systemic risk to the economy at any level, national, European or international. Re/insurance is pre-funded and not highly leveraged. It does not rely on short-term deposits that can be instantly withdrawn.....Solvency II already provides an innovative and high quality regulatory framework that meets regulatory concerns effectively,” according to the IUA’s submission.

Nick Lowe, Director of Government Affairs at the IUA, said the association was concerned that insurance and reinsurance would be affected by the fall-out from moves to tighten regulation of banking.

“There may be a temptation for the FSA to gold-plate Solvency II, but such a response is neither needed nor desirable,” he said. “Any attempt to interfere with the delicate checks and balances already in place under Solvency II would almost certainly make London a more bureaucratic, less attractive place to do business. It might also distort the marketplace and tie up capital unnecessarily, resulting in higher costs to our members and their customers.”