Labour is “very supportive” of the government’s plans to overhaul EU rules that govern Britain’s insurance sector, shadow chancellor Rachel Reeves said.
The government is eager to overhaul the EU-era Solvency II rules, which govern the sums of money insurers must hold on their balance sheets to protect themselves against bankruptcy, in a bid to unlock billions for investment in Britain’s economy.
Speaking at the Association of British Insurers annual conference today, Reeves said Labour supported plans to scrap the Solvency II rules adding that it was vital that extra cash on insurers’ balance sheets be used to boost the county’s growth.
Reeves said the UK needs to capture a share of the “industries of the future,” by ensuring businesses have access to capital.
Reeves, however, argued that simply overhauling the EU’s Solvency II will not be enough, as she suggested the UK must also support and work closely with the private sector to achieve its aims.
“You can’t achieve anything unless you work with partners,” Reeves said.
The shadow chancellor’s comments come after Prudential Regulation Authority (PRA) chief Sam Woods yesterday called on the government to begin implementing its Solvency II reforms.
Speaking at an ABI dinner, Woods said Britain needs to “move on” from talks and begin overhauling the EU’s rules.
Woods noted that “there has been a well-aired and very public disagreement between us and the annuity sector” on how much capital insurers should have to hold, but said the PRA is now ready to implement the reforms.
He explained that after a lengthy debate, the government’s approach left capital requirements roughly the same while allowing insurers to take more risk.
He said that while the eventual outcome was not what the PRA supported, the insurance sector watchdog has “accepted” the government’s view.
“If parliament supports that position then we need to move on from the debate and into implementation,” Woods said.