By Huw Jones
LONDON (Reuters) - The introduction of new European Union rules forcing insurers to hold enough capital to protect policyholders has gone well though some tweaks will be needed, Britain's top insurance regulator said on Wednesday.
The EU's Solvency II rules came into force this month, the result of many years of policy making and expensive preparations for insurers.
There has been concern among regulators about potential volatility in insurance company shares as investors compare the solvency capital ratio (SCR), a new core benchmark of health, that insurers now have to publish.
"It's so far, so good. It's been smooth so far," Sam Woods, executive director for insurance supervision at the Bank of England's Prudential (L:PRU) Regulation Authority told Reuters on the sidelines of an industry event.
There are differences, however, in the way insurers and regulators across the 28-country bloc are implementing the rules, and that is affecting consistency, he said.
A formal review of Solvency II is not due until 2018 but regulators are set to discuss "fairly soon" some aspects of the new rules to "iron out" inconsistencies, Woods said.
The so-called risk margin is a particular focus for Woods.
The role of the risk margin capital requirement is to protect the firm against a worse than expected outcome, ensuring it has enough capital to wind itself up and transfer obligations to another insurer and avoid uncertainties for customers.
"We don't like the way that calculation has worked. We will want to open up a discussion with colleagues about that," Woods said.
He said actual changes to the rules were "some way down the track" but a more consistent implementation of the new rules would help.
Prudential Plc was the first British insurer to report its SCR this month and the result reassured investors.
Prudential's SCR was 190 percent of the minimum requirement at the end of June, 2015, before allowing for the 2015 interim dividend, it said. Analysts had expected a ratio of at least 180 percent. A ratio of 100 percent or more shows insurers have sufficient capital to cover underwriting, investment and operational risks.