The Government has unveiled plans to slash regulation in the insurance sector and allow Britain’s insurance giants to unleash a flood of funding into UK infrastructure projects, in a major shakeup to EU-era financial rules.
Speaking to insurance bosses last night, City Minister John Glen said the Government will overhaul 2016 Solvency II regulation which requires firms to hold huge sums of money on the balance sheet.
The move could unlock tens of billions of pounds to be pumped into long-term assets like UK infrastructure, The Treasury said.
“EU regulation doesn’t work for us anymore and the government is determined to fix that by tailoring the prudential regulation of insurers to our unique circumstances,” Glen said.
“We have a genuine opportunity to maintain and grow an innovative and vibrant insurance sector while protecting policyholders and making it easier for insurance firms to use long-term capital to unlock growth.”
Glen said the current system was “rules-driven and burdensome” and would be reformed to “become UK-focused, agile and easily adaptable”.
The planned shake up from the Treasury and insurance watchdog Prudential Regulation Authority (PRA) will also include new flexibility to allow insurers to pump funding into assets like infrastructure.
It comes amid growing calls from Britain’s insurance giants to overhaul the rules, with Aviva last month calling on the Chancellor to shake up Solvency II rules.
Boss Amanda Blanc said: “UK insurers like Aviva can play an even bigger role in supporting the UK economy by investing more of that in the country’s essential infrastructure – the colleges, hospitals, transport and renewable energy, which are critical to our future.”