A high-ranking exec from the Bank of England’s (BoE’s) financial services watchdog has said the government’s plans to overhaul Solvency II will boost the insurance sector competitivity.
Charlotte Gerken, executive director of insurance at the BoE’s Prudential Regulation Authority (PRA), said the government’s plans for reforms of Solvency II will increase the UK insurance sector’s competitiveness and boost investment in the UK economy.
In a speech to JP Morgan’s European Insurance Conference, Gerken said plans to reform the rules that govern the UK’s insurance sector will free up capital for “investment in the productive UK real economy,” as she said the PRA believes the overhaul will achieve the government’s aims.
The BoE exec noted that UK insurers currently manage almost £890bn worth of assets, as she said the reforms to Solvency II could “support the productive investment of those funds.”
Gerken said the shakeup could also boost the UK insurance sector’s competitivity by allowing insurers to free up capital by cutting the “risk margin” they must factor in, under the current Solvency II rules.
The comments come as the UK government is planning to shakeup the EU rules that set out the amounts of capital insurers must hold to reduce the risk of insolvency.