The UK insurance industry has signalled that it would be lobbying for changes to Solvency II capital rules following the Brexit vote.
According to a Financial Times
report, the Association of British Insurers (ABI) has sent a new submission to the UK government and called for a regulatory environment which is “appropriate for the UK market.”
Huw Evans, ABI chief executive, told the publication that “there are certainly changes to Solvency II that could be made.”
“There’s an opportunity to improve it in the UK,” the Financial Times
quoted him as saying.
Implemented in January, Solvency II is a European Union (EU) legislation that harmonises insurance regulation across all 28 member states. It compels insurers to have strong financial buffers in place and lays out other requirements covering authorisation, corporate governance, supervisory reporting, public disclosure, risk assessment and management. Firms based in the UK that comply can write policies and offer other services to customers across the economic bloc.
Evans told the Financial Times
that the reporting requirements were “pretty onerous” and could also be changed like the capital obligations.
While it called for some changes, the ABI’s submission also stressed the need to maintain rules on EU passporting rights and on how companies use data. Evans said a complete revision of Solvency II was unlikely.
“It makes no sense to tear up Solvency II completely and saddle the industry with hundreds of millions of pounds of unimplementation costs on top of the £4bn implementation costs,” Evans told the Financial Times.
Earlier this month, a UK parliamentary committee launched an inquiry into Solvency II to reconsider burdensome EU rules for insurers and to see possible improvements to protect consumers.
“Brexit provides an opportunity for the UK to assume greater control of insurance regulation,” parliament’s Treasury Select Committee said in a statement, as reported by Reuters.
“Among its (Solvency II) manifest shortcomings was the failure to secure value for money over its implementation,” the legislative panel added.
The inquiry findings, along with the ABI’s proposed changes, are expected to shape the UK’s new regulatory framework once it leaves the EU.
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