AVIVA PLC The EU's new 'Solvency II' rules come into force in January and BoE Deputy Governor Andrew Bailey said British insurers were on course to meet the deadline.
Legislators on the British parliament's Treasury Select Committee asked Bailey if the stricter EU rules would prompt some insurers to reduce their presence in Britain.
With a referendum on Britain's membership of the EU due before the end of 2017, British politicians are highly sensitive to any regulation that causes disadvantages to firms that do not use the euro as a currency.
"The bigger issue in the UK is what the retirement savings market is going to be in the future," Bailey said. "Arguably it looks more like an asset management industry in the future."
The British government has introduced reforms to pensions that allow people to cash in their pension pots, rather than being forced on retirement to buy an annuity that pays out until death.
The net cashflow of traditional life insurance products in Britain had also been negative for the past eight years, Bailey said.
But the BoE - where Bailey heads the Prudential Regulation Authority (PRA), which supervises banks and insurers - is also concerned about how the new EU rules will work in practice in the early years.
Bailey said British insurers would initially be at a disadvantage to their euro zone rivals when firms begin reporting the new solvency ratios from January.
Euro zone insurers will be allowed to use a much higher interest rate yield curve than British insurers to discount future liabilities, creating a comparison that market analysts should not over interpret, Bailey said.
Firms are already facing market pressure to show by how much their ratio surpasses the 100 percent minimum threshold.
"What we are interested in is that the firm has met the minimum standards," Bailey said.
"Some people say you have got to have a number that is 160 or 170. Well not in our book. In our book, it's they meet the capital requirements. I am not interested in the significance of individual numbers," he said.
The PRA has said that introducing Solvency II was its single biggest task this year.
"It's a more robust risk management system than has been there in the past," Bailey replied.
(Editing by Jeremy Gaunt)
By Huw Jones and David Milliken
