Industry ICA reviews impress regulator

The insurance industry is still underestimating the level of capital required to support its risks, according to the regulator, although the Financial Services Authority (FSA) says the gap between insurers’ assessments and its own are “narrowing”. Following the completion of first round reviews of Individual Capital Assessments (ICA) – some two and a half years after the Individual Capital Adequacy Standards (ICAS) framework was introduced – the FSA said while general insurers assessed their required risk-based capital at £14bn, the regulator added a further £1.8bn as part of its individual capital guidance (ICG) exercise to take the industry’s total required capital level to £15.8bn. For life insurers the gap was greater and the regulator required a capital increase of £7.2bn to take the total capital held by life insurers to £59.1bn.