Senators should also bear in mind developments to strengthen regulation of the insurance sector at an international level. The forthcoming EU solvency II directive represents the first stage of a major transformation of the way the industry will be regulated. The most essential features of the framework directive are the introduction of an economic risk-based approach to the measurement of assets and liabilities and a much greater focus on qualitative issues such as governance and the role of the supervisor. Capital requirements will be determined by an evaluation of a company's level of risk using a consistent set of measurement principles, resulting in an appropriate level of capital for solvency purposes. These changes will impact on all companies in the insurance sector and are likely to take effect from 2014.