LONDON, March 20 (Reuters) - The Bank of England said onFriday that it would apply new European Union insuranceregulations "proportionately", following industry fears that thecentral bank might seek to add extra rules for companies basedin Britain.
The so-called Solvency II rules, which take effect in 2016,aim to ensure that insurers such as Britain's Prudential and Aviva hold enough capital to honour policyholdercommitments even when markets turn sour.
In a statement on Friday about how he intended to police therules, BoE Deputy Governor Andrew Bailey said the Britishinsurance industry already managed risks in the way the rulesintended, unlike elsewhere in Europe.
"Solvency II must be applied proportionately, with theemphasis on substance over form, if we are to maintain our focusas a forward-looking and judgement-based regulator," he said.
BoE Governor Mark Carney said there would be "robustimplementation" of the rules, which he called "revolutionary".
In January, a senior BoE official, Paul Fisher, said thecentral bank did not intend to use the new rules to requireinsurers to hold more capital has a buffer against losses.
"We can't and won't gold-plate," Fisher said, dismissingsuggestions Britain might implement a tougher version of the EUrules.
However, the BoE has said that it is considering subjectingthe insurance industry to some of the tougher rules that it hasimposed on British banks since the financial crisis.
Senior insurance executives will face higher levels ofscrutiny. And earlier this week a new member of the BoE'sFinancial Policy Committee, Alex Brazier, said there could be acase to make insurers undergo bank-style stress tests. (Reporting by David Milliken)