New European Union rules that shake up how insurance companies offset risk and protect policyholders must not be rushed despite a 2012 deadline, a senior British regulator said on Tuesday.

European Commission proposals known as Solvency II are before the European Parliament and EU states for approval but even if the law is adopted by the end of the year, implementing measures will not be finalised until 2010 or 2011. Critics say that gives the industry too short a time to adopt them properly.

A provision to radically reshape how cross-border insurers are supervised is also dividing EU states, raising further concerns about the overall timetable. Sally Dewar, managing director of wholesale markets at the Financial Services Authority said: “Eventual success very much depends on getting the detail right.”

“It would be a lost opportunity if we were pushed into hasty implementation and in the process got the detail wrong," she told the Association of British Insurers event. Dewar added: “The eventual date for switching on new rules must be very carefully set.”

However, EU Internal Market Commissioner Charlie McCreevy said many states opposed his plan for group supervision of cross-border groups that collect the bulk of premiums in the 7 trillion euro sector.

Under the proposal, the home country supervisor of a cross-border company would have the last say on how much capital the company must set aside to cover overall liabilities, including those held in subsidiaries elsewhere in the EU.