Brexit has given Britain a “unique” opportunity to refashion its globally important insurance sector to attract more new entrants without undermining high regulatory standards, the Bank of England said on Tuesday.

Brexit allows Britain to better tailor the rules to the UK insurance market, said Anna Sweeney, the BoE’s executive director for insurance supervision.

“We now have the ability to set our own direction,” Sweeney said in a speech to the Association of British Insurers.

The BoE said it will meet with industry to find out why so few potential new entrants to the insurance market have come forward.

“We can and should play a part in trying to reduce any unnecessary barriers that are there,” Sweeney said, adding the Bank will consider ways to make authorisation of new insurers more efficient.

London is a global hub for insurers, with 190 insurers from the EU continuing to operate under the BoE’s temporary permissions regime ahead of full authorisation.

The Bank is now deciding whether the EU insurers can operate as a less heavily regulated branch or must become a subsidiary under full UK supervision. Sweeney said it was “only right to consider in detail our approach to these firms”.

Britain’s finance ministry has launched a consultation for revising Solvency II, the capital rules for insurers inherited from the European Union, which Britain left on Dec. 31, 2020.

Alan Sheppard, senior technical advisor at the BoE’s Prudential Regulation Authority, told the conference the PRA planned a further consultation early next year on a package of proposals for changes to Solvency II, rather than piecemeal changes.

“It won’t be the last word, we hope it will be an improvement, but it won’t be perfect,” Sheppard said.

Ahead of then, the Bank will gather data from the industry to understand the impact the proposals would have on capital, investment and policyholder protection.

The underlying principles of Solvency II won’t be changed, Sheppard said.

Changes to capital rules coupled with a more agile style of supervision that allows more room for judgment can make a significant contribution to the competitiveness of the UK insurance industry, Sheppard said.

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