UPDATE 1-Brexit won't mean lower capital for insurers, says Bank of England

(Adds more detail)

By Huw Jones

LONDON, March 16 (Reuters) - A review of rules will not lead
to any "radical departure" or a reduction in capital
requirements, but it will take time to complete, Bank of England
Deputy Governor Sam Woods said on Tuesday.

Britain's exit from European Union has prompted the
government to review insurance capital rules inherited from the
bloc, raising industry hopes of less burdensome requirements.

Woods, who also heads the BoE's Prudential Regulation
Authority, which regulates Britain's top banks and insurers,
played down any such expectations.

"Now that we have left the EU we have no interest whatsoever
in lowering levels of resilience or policyholder protection, but
we can and should make changes to tailor regulation so it fits
our market better and is more efficient and coherent," Woods
told the Association of British Insurers (ABI).

"That process will take some time but it will work better if
the detailed rules are placed into our rulebook."

The ABI said last month that 35 billion pounds ($48.4
billion) of capital locked in by the risk margin element in
capital rules known as Solvency II, could be used to increase
investment in the UK economy and tackle climate change.

The risk margin in an extra layer of capital insurers must
hold as a safety buffer in case they get into trouble.

However, Woods said he had doubts "about a reform package
which materially decapitalises the insurance sector," adding:
"While it's natural for the private sector to focus on private
interests, it’s part of our job to keep an eye on the potential
public costs of significant insurance failures."
($1 = 0.7231 pounds)
(Reporting by Huw Jones; editing by John Stonestreet)