Solvency II capital rules will come into force on 1 January but the industry has had 10 years to prepare and has invested £3 billion in ensuring it is ready, the ABI said.
Solvency II is a Europe-wise legislation that specifies how much capital an insurance company must hold. Comprising 3,200 pages of text, the legislation aims to encourage good risk management and transparency, and to increase consumers' confidence when buying insurance.
More than 400 companies are expected to come under the scope of Solvency II, the ABI said. Nineteen UK firms have been given approval under the Solvency II rules to use their own internal models to calculate capital requirements. That is more than three times as many as in any other EU state, the ABI said.
ABI director general Huw Evans said: "The UK industry has supported the objectives of Solvency II since the beginning and invested significant time and resources to ensure it works as intended for the market. With firms now having confirmation about their Internal Models, the industry is well prepared to transition to Solvency II in January."
The UK industry has high levels of capitals already, so policyholders can be reassured that they will not notice a difference in the transition. The new regime will ensure customers can continue to have confidence in the products they buy, and know their claim or annuity will be paid," he said.
"As we move to Solvency II, time should now be given for this change to settle in before any further reform. To ensure Solvency II creates a level playing field, and the competitiveness of the UK industry continues, a convergent and consistent approach to these rules is needed across Europe," Evans said.
Insurance expert Rabbani Choudhury of Pinsent Masons, the law firm behind Out-Law.com said: "One of the key focuses of insurance regulation over the past 14 years will finally became reality for firms in less than two weeks. We are, without doubt, in the midst of a period of unprecedented change in the way that insurance firms will be regulated once Solvency II obligations for firms start to bite."
"What insurers will be transitioning to is nothing short of wholesale root and branch reform. Reform of the root by way of the new prudential requirements that are designed to make firms hold more capital to support their business and branch reform by the way insurers will have to govern to prioritise the protection of policyholders and beneficiaries," Choudhury said.
"While there will evidently be many benefits to be met for everyone including insurers from Solvency II regulation, there will be some tricky judgments required by firms, particularly with regard to how the more stringent requirements of Solvency II are to be met. While we have an extensive new framework covering thousands of pages of legislation, rules and guidance, the direction on how the regulator will approach certain issues remains uncertain. What will help firms in the early days will be one-to-one engagement with the Prudential Regulation Authority on issues that concern them and an open-minded approach by the regulator on how compliance can be achieved," he said.
Earlier this month an industry survey found that European regulators were increasingly choosing to impose additional last-minute requirements on insurers as part of their preparations for the new regime. Over two thirds of firms responding to an Insurance Europe survey reported that their regulators had chosen to 'gold plate' the new requirements. However, the vast majority of surveyed firms said that they would be ready to operate under the new regime from January. Firms covered by the research accounted for 92% of European insurance premiums.