So the Tories have ended all the speculation and finally announced that FSA will cease to exist from 2012 with its powers having been shared among several new regulatory bodies, with the majority coming under the control of the Bank of England.

But with the transition and creation of the new prudential authority what will really change for the UK (re)insurance sector?

To be honest, we at Reinsurance Towers aren't exactly sure yet and I'm not entirely sure that the Tories or the Bank of England have a clue at the moment. But, from what we can see so far, we at Reinsurance Towers currently predict one of the following:

1. Taxes will rise, as will your regulatory bills to pay for it all. Some more insurers and execs will follow Brit's example and jump ship for less tax heavy domiciles.

2. The Prudential Regulatory Authority (PRA), will start off with a lot of purpose interfering in issues both large and small but will soon become more than a little jaded as, let's face it, that it's actually pretty hard to get anything done and will end up doing what everyone seems to expect at present and just concentrate on the banks.

3. The Financial Policy will produce enough hot air for their building to achieve near lift off but not actually get anything done.

4. The new Consumer Protection and Markets Authority will throw its weight around from day one throwing around fines and other punishments at random in an attempt to show that it is making a difference. When that doesn't work for Joe Public they will decide to completely rewrite the conduct of business rules and insurers will end up caught up in having to budget for redesigning products and systems (again)

5. Due to there being so many regulators around fighting for their existence, the PRA will all forget about Solvency II until some kindly (re)insurance exec throws their toy out of the pram in a large enough fashion to remind the regulator that insurers deserve a little attention

6. The only people who will really benefit from the change are sign makers and of course, consultants

7. Repeat after us - "we are not a bank" - that's a phrase you are going to be using a lot people

But of course, it's not like us to be pessimistic at all...