FSA reduces reinsurance rules to meet EU minimum rules

The European Commission’s Reinsurance Directive posed several major issues for the UK regulator. With rules already in place for reinsurers that exceeded the EU minimum, the FSA’s new principles-based approach and pledge to avoid gold-plating has led to a reduction in rules for pure reinsurers.

Unlike some other member states, the UK regulates reinsurers in line with its supervision of direct insurers. Therefore, when the EU developed its Reinsurance Directive, the UK approached the new rules from a good starting position. Some member states now have a substantial amount of work to do to implement the directive before 10 December 2007 and pull their reinsurance regulations up to scratch. But for the UK the issues are more targeted, and the dilemma has been more about whether to lower requirements, rather than to increase them.