Bank of England steps up efforts to encourage new insurers
By Huw Jones and Carolyn Cohn
LONDON (Reuters) -Brexit has given Britain a “unique” opportunity to reshape its globally important insurance industry to attract more new entrants without undermining high regulatory standards, the Bank of England said on Tuesday.
Brexit allows Britain to better tailor the rules to the UK insurance market, said Anna Sweeney, the BoE’s executive director for insurance supervision.
“We now have the ability to set our own direction,” Sweeney said in a speech to the Association of British Insurers.
The BoE said it will meet with the industry to find out why so few potential new entrants to the insurance market have come forward.
“We can and must play a role in trying to reduce the unnecessary barriers that exist,” said Sweeney, adding that the bank will consider ways to make licensing new insurers more efficient.
London is a global hub for insurers, with 190 EU insurers continuing to operate under the BoE’s temporary authorization regime before obtaining full authorization.
The Bank is now deciding whether EU insurers can operate as a less regulated branch or become a subsidiary under full UK supervision. Sweeney said it was “very fair to review our approach to these companies in detail.”
The UK Ministry of Finance has launched a consultation for the review of Solvency II, the capital rules for insurers inherited from the European Union, which Britain abandoned on December 31, 2020.
Alan Sheppard, senior technical adviser to the BoE Prudential Regulatory Authority, told the conference that the PRA is planning a new consultation early next year on a set of proposed changes to Solvency II, rather than piecemeal changes.
“It won’t be the last word, we hope it will be an improvement, but it won’t be perfect,” said Sheppard.
Previously, the Bank will gather data from the industry to understand the impact the proposals would have on capital, investments and policyholder protection.
The underlying principles of Solvency II will not be changed, said Sheppard.
Changes in capital rules, coupled with a more agile style of supervision that leaves more room for judgment, can make a significant contribution to the competitiveness of the UK insurance industry, Sheppard said.
(Reporting by Carolyn Cohn and Huw Jones; editing by David Evans)