FRANKFURT (Bloomberg) — The supervisory body advising the European Commission on new rules for insurers said it may lower proposed minimum capital requirements after consulting with firms across the continent.

"In the revised advice, the minimum capital requirement factors have been amended," the Committee of European Insurance and Occupational Pension Supervisors, known as Ceiops, said in a statement yesterday. "The revised factors have generally been lowered relative to the consultation paper."

The European Commission's Solvency II directive, due to take effect toward the end of 2012, aims to align insurers' capital with risk to protect policyholders. Insurers and industry groups have publicly criticised Ceiops' proposals because they could require firms to set aside too much capital, hurting growth and pushing up prices for consumers.

Bermuda Monetary Authority, the Island's insurance regulator, is working to achieve regulatory equivalency with Solvency II, so Bermuda insurers doing business in the EU will not be disadvantaged.

Frankfurt-based Ceiops is in charge of fine-tuning Solvency II on behalf of the EU Commission. The body today published its "final advice" on calculating insurers' capital requirements, which will be tested in a fifth and final industry-wide study to begin this summer.

Under the new regulatory framework, insurers will need to have sufficient reserves to cover a minimum capital requirement. There will also be a solvency capital requirement, which will ensure a firm can cover all the risks it could face.

If an insurer's reserves were to fall below the solvency capital requirement, supervisors would be able take action to restore capital adequacy. If reserves were then to fall below the minimum capital requirement, the regulator would have the power to close the insurer or to transfer its assets to another company.