Government looking to make UK insurance market a new hub

UK may be losing some insurance business due to Brexit – but it’s also looking to gain some more

Government looking to make UK insurance market a new hub

Insurance News

By Terry Gangcuangco

UK insurers may have just found an ally in the government after new regulations ensuring the UK gets a slice of the insurance-linked securities (ILS) pie were published.

In a move essentially countering the Prudential Regulation Authority’s (PRA) take on the matter, the government introduced a competitive regulatory and tax regime for ILS. A report by the Financial Times said the business – estimated to be worth $70 billion – is so far based mainly in offshore sites like the Cayman Islands and Bermuda.

This is good news for the industry as ILS will enable insurance/reinsurance companies to transfer risk to the capital markets, connecting investors to insurance buyers. More than $80 billion of ILS have been issued to date – with the UK missing out until now.

“By publishing these regulations, the UK government is giving the insurance and reinsurance industry greater certainty in how the new regime will work – enabling them to be on the front foot in preparing for the new rules when they come into force in autumn,” said the government when the regulations were published.

Stephen Barclay, Economic Secretary to the Treasury, noted that the bespoke regime for ILS will ensure the UK remains the most competitive insurance and reinsurance hub in the world.

“This global business is evolving rapidly and we are determined to make sure we’re part of this evolution,” he said.

For Malcolm Newman, chairman of the London Market Group’s ILS Taskforce, the framework offers “a very exciting future” for the London Market.

“We believe there is a real appetite in the London Market to invest in ILS products which will bring investors to the UK and make a significant contribution to growing the UK’s trade,” said Newman.

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