LONDON—The U.K. insurance regulator's decision to delay full implementation of Solvency II until 2014 may mean large insurers will have to comply with two sets of solvency rules in 2013.

While the Financial Services Authority's announcement this month adds some clarity about the start date for Solvency II in the United Kingdom, significant uncertainties remain about which requirements insurers will have to fulfill in 2013.

The risk-based capital regulatory regime for insurers and reinsurers previously was slated for introduction across the European Union on Jan. 1, 2013.

But recent moves by European Council committees and the European Parliament mean a Jan. 1, 2014, start date is more likely, with some elements of the new rules being phased in over several years.

In saying that it had revised its planning assumptions for Solvency II, the London-based regulator said it expects Jan. 1, 2013, to remain the date at which national regulators and the European regulator, the Frankfurt, Germany-based European Insurance and Occupational Pensions Authority, would need to have Solvency II transposed into law. But the FSA also said that Jan. 1, 2014, is the date it assumes that “Solvency II requirements would be switched on for firms.”

Companies that wish to have an internal capital model approved by the FSA have from March 2012 until mid-2013 to submit their models to the regulator for assessment.

Internal models are likely to lead to lower capital requirements for companies than using the standard model contained in Solvency II, but each internal model used by the companies must be approved by a regulator.

This is good news for companies seeking internal model approval from the FSA, said Janine Hawes, a London-based director in KPMG L.L.P.'s Solvency II technical group.

“This will give firms greater flexibility around their implementation plans,” Ms. Hawes said.

Small U.K. insurers may “breathe a sigh of relief” given the FSA's extension, said Gareth Haslip, London-based head of the risk and capital strategy group for Europe, the Middle East and Africa at Aon Benfield Analytics, a division of Aon Corp.

Larger insurers that already have invested heavily in preparing for a Jan. 1, 2013, start date should capitalize on their readiness and use the investment in risk management to help their business strategy, he said.

Scott Paton, an insurance expert at London-based PA Consulting Group Ltd., also said the delay allows insurers to improve their internal models. “They now have a longer window, meaning that there should be more time to do more things to improve the quality of their submissions and to embed the new ways of working into their organization,” he said.

While the FSA announcement gives insurers in the United Kingdom some clarity about the Solvency II start date, there is some uncertainty about what rules they will need to comply with during 2013, experts say.

The FSA announcement “is helpful, as it removes some of the distracting debate and formally assumes a year's delay in implementation to 2014,” said Jim Bichard, an insurance partner at PricewaterhouseCoopers L.L.P. in London. “Despite this, insurers will be keen for more detail from the FSA on the practical implications of complying with two parallel regimes in 2013.”

It is unclear whether insurers will have to comply with the FSA's individual capital assessment requirements, seen as a forerunner to Solvency II, in 2013, Ms. Hawes said.

“Many in the insurance industry would like to see the FSA drop this requirement for 2013, allowing forms instead to report on a Solvency II basis,” she said.

Lloyd's of London CEO Richard Ward previously said the market was lobbying the FSA to adopt a Jan. 1, 2013, start date to avoid Lloyd's and its constituent syndicates effectively being forced to use two methods of solvency calculations next year.

Lloyd's has been pressing syndicates to comply with Solvency II by the end of this year, in part to try to ensure that the market's internal capital model is approved.

In a statement reacting to the FSA's decision to delay the start date until 2014, Sean McGovern, general counsel for Lloyd's, said the market is glad to see the FSA is “committed to pressing ahead and maintaining the momentum on Solvency II implementation.”

“However, we urgently need clarity on how firms are to be treated in 2013 if we are to avoid significant unnecessary and duplicative expense,” Mr. McGovern said.

“Lloyd's is focused on completing our preparations for internal model approval in the most timely and cost-effective way possible, and we hope the FSA will be pragmatic” and allow companies to move to the Solvency II rules before 2014, he said.

Delaying Solvency II implementation “is likely to be met by disappointment from many of the largest insurers...when they have committed time and resources, including their best people, to progressing for a mid-2012 delivery” of their internal capital models, said Mr. Bichard.