Britain’s insurance giants have welcomed government plans to shake-up EU-era solvency rules as they prepare to unleash a wave of investment across the UK.
City Minister John Glen last night said the government will overhaul 2016 Solvency II regulation, which requires firms to hold huge sums of money on the balance sheet, freeing up a potential £80bn to be pumped into the UK economy.
Sir Nigel Wilson, boss of insurance and pensions firm Legal & General, which has around £1.3trillion in assets under management, said the shakeup was an example of government improving post-Brexit regulation through collaboration between regulators and industry.
“When implemented it will enable Legal & General to invest billions more in the UK’s levelling up, net zero and science super power agenda,” he said.
The planned shake up from the Treasury and insurance watchdog Prudential Regulation Authority (PRA) will also include new flexibility to allow insurers to fund assets like infrastructure.
Phoenix Group, one of the UK’s biggest insurance firms said it was firmly behind the measures.
“The proposed reforms are a positive outcome for the industry, are fully aligned with the Treasury’s stated objectives and represent a unique and very significant opportunity to ensure more private-sector capital can be directed by insurers into long-term infrastructure assets in the UK,” Andy Briggs, CEO of Phoenix Group said.
“At the same time, Phoenix will remain fully committed to preserving policyholder protection which is the core priority for us as a business.
“We look forward to working intensively with the Treasury and PRA in the coming months to finalise and implement the reforms which will enable Phoenix Group to increase its investment across the UK to support and accelerate the decarbonisation and levelling-up agendas.”
Pressure had been mounting on the Treasury to shake up the rules with Aviva last month calling for government to free up funding with Solvency II reform.
Boss Amanda Blanc welcomed the changes announced by the government last night.
“We warmly welcome these proposals which should unlock significant fresh investment in the UK,” she said.
“Effective reform of Solvency 2 rules will enable UK insurers like Aviva to play an even bigger role in supporting the UK economy, investing more in the country’s essential infrastructure – the colleges, hospitals, transport and renewable energy which are critical to our future.”