Insurers are making progress in adjusting their business models to account for low-interest rates and the complex new risk-capital regime called Solvency II that took effect at the start of the year, the EU’s top insurance regulator said.

Insurers have also been diversifying their investment portfolios to obtain greater returns, while avoiding an alarming increase in the degree of risk, Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority (EIOPA), told Reuters in an interview.

“We see an evolution; changing business models is more and more a part of discussions in the boards of companies,” Bernardino said, adding that dividend policies were a concern at some insurers where these models were under stress.

The Solvency II rules, which came into force on Jan. 1, require insurers to overhaul the way they assess risks on their books and measure the capital required to cover obligations to policy holders often decades in the future.

They are also forcing a revamp of life insurance products in many countries where policies included high guaranteed interest rates to customers. More changes are needed, Bernardino said.

“There is urgency, especially for pockets of life insurance businesses based on hard guarantees,” he said.

“I’m more confident this year than last on the pace of change but does that mean everybody is already there? No.”

European insurers were moving at different speeds and the market will see big shifts in the coming five years, he said.

“We need to see more simple, more standardized products, and value for money for consumers,” he said.

EIOPA is carefully monitoring the implementation of Solvency II in face of low interest rates, but there have been no surprises on insurers’ capital positions, he said.

Investor worries about insurers possibly needing to raise capital to meet Solvency II requirements hit stocks of some Dutch companies last year, prompting Delta Lloyd (Euronext: DL.NX – news) into a 650 million euro ($728 million) rights issue in March.

Insurer Aegon on Monday said it was selling 3 billion pounds ($4.4 billion) of annuity liabilities to Britain’s Legal & General Group, a move analysts said was probably driven by Aegon (Swiss: AGN.SW – news) ‘s desire to improve its solvency ratio.

Bernardino said analysts and investors must understand that there is no “magic number” for the regulatory Solvency Capital Requirement (SCR), which varies depending on the risk sensitivity of an insurer’s business model to interest rates, insurance or credit risks.

“The ones with more sensitivity will need to have more leeway on capital if they don’t want to be close to the SCR,” he said.

“You can’t say that just because some companies have the same number, they have the same level of risk,” he added.