The Financial Services Authority (FSA) has published a consultation paper outlining its proposals for the implementation of the long-awaited European Union (EU) Reinsurance Directive, which includes rules to enable the setting up of Insurance Special Purpose Vehicles (ISPVs). The Directive introduces a minimum level of harmonized prudential supervision of reinsurance across the EU. Reinsurers will be supervised by the authority of their home state and will be able to operate throughout the European Union on that basis. While the impact on UK reinsurers will be limited, the FSA hopes this will provide an opportunity to simplify regulations in areas where the current regime exceeds the Directive’s requirements.

Thomas Huertas, FSA Director for Wholesale Firms, “Introducing ISPVs will give insurers and reinsurers access to more diverse sources of capital and enable them to manage their capital more efficiently.”