To supplement its work on the relationship that the UK might seek to have with the EU following Brexit, the Treasury Committee of the House of Commons established in September 2016 an inquiry into EU insurance regulation.
The inquiry has four main objectives:
- to consider the options for the UK insurance industry that are created by the decision to leave the EU;
- to assess any impact of Solvency II on the competitiveness of the UK insurance industry;
- to examine the impact of Solvency II on the role of insurance in meeting the needs of UK customers and the wider UK business economy; and
- to assess any learning for regulators and industry from the introduction of Solvency II.
Since establishment, the inquiry has received written evidence from market participants and during January and February of 2017 it also received oral testimony from a number of leading individuals at UK insurers, insurance bodies, professional services firms and the Prudential Regulation Authority (the PRA).
The latest evidence received by the inquiry was given by members of the PRA, including Sam Woods (Deputy Governor for Prudential Regulation and Chief Executive Officer).
Following on from this evidence given by the PRA, we have prepared a note summarising some of the key issues that the inquiry has been asked to consider so far and what these issues might mean for the future of insurance regulation in the UK following Brexit.
In our view, it is clear from the evidence submitted to date that there is not a significant appetite to abandon Solvency II and start again with a new insurance regime in the UK, especially considering the cost and effort firms put into complying with Solvency II. However, what some of the evidence submitted to the inquiry does show is that the PRA may be willing (depending on what form insurance regulation takes following Brexit) to be slightly more flexible in its approach to regulation in the future than it considers it is currently permitted to be.
Please click here to download our note.