The UK could see a thriving commercial insurance and reinsurance market, with many businesses setting up in-house insurers if changes to the country’s regulatory regime were made, a leading industry expert has said.
Sean McGovern, chair of the London Market Group’s government relations workstream and chief executive officer of UK and Lloyd’s at insurance giant AXA XL, described the commercial sector as having “sophisticated clients” and argued that what the segment needed was a different regulatory approach from retail sectors such as home and motor insurance.
“The existing regulatory regime is not appropriately calibrated to the features of the London market,” he told Reuters.
McGovern pointed to the lack of domestic commercial reinsurance companies in the country and the absence of ‘captives’, or in-house insurers set up by many large companies.
“The regulatory regime does not appear to be encouraging the establishment and growth of business in the UK,” he added.
The UK parliament’s House of Lords Industry and Regulators Committee recently launched an inquiry into the regulation of the commercial insurance and reinsurance industry to evaluate the system’s impacts on the competitiveness of the London market.
The inquiry aims to “explore the extent to which regulatory policy is well-designed and proportionately applied, and the possibilities for optimising policy following Brexit.”
It will also assess the roles of the Bank of England and the Financial Conduct Authority (FCA), and the appropriateness of regulation relative to the risks posed by the London marketplace, including the content of the regulations and their implementation and application
The committee is asking for written submissions from industry participants, organisations, and interested parties, which can be submitted to the UK parliament’s official website on or before February 11.