The UK’s Finance Ministry has announced that the first post-Brexit reforms to the Solvency II capital rules will be in force by the end of this year.

Despite leaving the European Union, the UK retained Solvency II rules, which are the regulatory requirements for insurance firms within the bloc.

Through the reforms, the UK Government hopes to reduce bureaucracy and facilitate investment in the country’s insurance industry.

In a statement, the finance ministry said: “The reforms will boost economic growth by delivering a more tailored, clearer and simpler regulatory regime. They will also cement the UK as one of the best countries in the world in which to do business.

“The government is determined to implement reforms as soon as possible. The government expects that reform of the risk margin will be in force in legislation by year-end 2023.”

The risk margin is the estimated cost for an insolvent insurance company to transfer its policies to a third party in order to prevent losses for customers.

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Once passed, the Financial Services and Markets Bill will allow the government to amend EU laws related to the financial services industry.

The ministry has also prepared a draft of regulations to make amendments to the law governing UK’s insurance sector.

The ministry added: “It is considering options to enable reforms to the matching adjustment to come into force by the end of June 2024, and the remainder of the new regime will come into force by year-end 2024.”