Insurance partners Pollyanna Deane and Chris Finney have submitted a response to HM Treasury’s Call for Evidence for the Review of Solvency II. Our submission reflects the views of our respondents drawn from across the industry, large and small, retail and commercial, Lloyd’s market and reinsurance firms. We are grateful to the insurers and reinsurers that were kind enough to discuss the Call for Evidence with us and help us to prepare this response.
On 23 June 2020, the Government announced that it would review certain features of the prudential regulatory regime for insurance firms, known as Solvency II. This call for evidence is the first stage in the review of Solvency II, with the aim of ensuring that the UK’s prudential regulatory regime for the insurance sector is better tailored to support both the unique features of the sector and the UK regulatory approach.
Our findings include:
- The insurance industry is not keen to throw out Solvency II completely. Instead, they seek “improvement at the edges … rather than a fundamental re-examination”.
- One of the key refrains from the industry has been the request for a reduction in complexity and that proportionality should be applied to the requirements – better and more effective regulation does not mean more regulation.
- A common point made by our correspondents was that Solvency II had created a small separate industry of its own, costing at least 3% of an insurer’s income to produce the required data and returns, so we were concerned to find that most if not all respondents view Solvency II returns as a stand alone operation and do not use the information they provide in the day to day running of the business.
- We would welcome more and better sharing of data from the regulator.
- Finally unless the regulator wants to be seen as out of touch and out of step with the industry it regulates, points already raised by the ABI in 2017 on Solvency II should all be addressed, reflecting, as they do, genuine market concerns.
To read the submission in full please click here
