(Reuters) — Reform of insurance capital rules should not be a “free lunch” that puts pensioners and policyholders at risk, Bank of England Deputy Governor Sam Woods said Friday, as the industry debates rule changes potentially delayed by political turmoil.

Changing insurance rules known as Solvency II that were inherited from the European Union is seen by the government as a key Brexit “dividend” for Britain's financial industry, but the pace and substance of the reform have dismayed insurers.

The EU is further ahead in approving similar changes.

A draft U.K. law was due to be unveiled this month to implement insurance and other reforms, but political turmoil in Britain has left it without a financial services minister as a new prime minister is chosen.

“The world won't implode if we don't have a City minister for a day or two. I think we are going to get one very soon,” Mr. Woods told an online event.

The BoE has proposed amending three core parts of Solvency II to make it easier for insurers to invest in long-term assets like infrastructure to help Britain meet net zero targets.

Mr. Woods said there is general agreement on two of them, but there is opposition to the third, which relates to recalibrating the so-called matching adjustment, which allows insurance companies to recognize as capital up-front a part of the income they expect to earn on their assets in the future.

“In our view, a package which did not tackle the issues we have identified with the matching adjustment would be seriously unbalanced,” Mr. Woods said.

It would simply remove bits of regulation that insurers don't like, he said, adding that the MA already accounts for capital relief equivalent to two-thirds of the entire capital base of the life insurance industry.

“I worry that some might consider such a thing to be a free lunch, but, in fact, less capital, fewer checks and fewer restrictions on assets, with no steps to strengthen the part of the regime where that is needed, means more risk for pensioners and other policyholders,” he said.