LONDON, Nov 3 (Reuters) - Around 20 UK insurers are applying to use their own “internal” solvency models from January 2016 and it is important these models remain appropriate on an ongoing basis, Britain’s top insurance regulator said on Tuesday.
The internal models should enable insurers to cut capital costs when European Solvency II capital rules are introduced in January in comparison with a standard model.
“For those who do gain model approval this December, they should make sure their models remain fit for purpose on an ongoing basis and will need to assure us that this is the case,” Sam Woods, executive director of insurance supervision at the Bank of England, told an Association of British Insurers’ conference.
Woods reiterated that insurers will be able to use transitional measures to smooth the path to complying with Solvency II requirements, which are considered more onerous than current capital rules. (Reporting by Carolyn Cohn; editing by Jason Neely)