ECONOMY

Insurers to lobby on new plans

LONDON (Reuters) – Insurers should increase pressure on the European Union to ensure that new rules for the industry are in line with innovative UK proposals, rather than watered down to satisfy all parties, the UK’s insurance trade body said. The European Commission is due to propose the Solvency II reforms in July, but key issues are being hammered out over the coming weeks as an initial draft of the key principles behind the regulatory changes is being pulled together. The new rules are intended to update EU guidelines regulating how insurers calculate the money they hold in escrow to back policies, bringing regulation of the world’s largest insurance market into line with the industry’s increasingly sophisticated modeling processes. But the Association of British Insurers (ABI) warned on Friday that the outcome of several key points – from how groups with cross-border businesses are supervised to the regulation of investment strategies and the question of minimum capital requirements – remained to be decided. «(Insurers) need to press hard on this to ensure we get the right outcome. The stakes are high, and the time is now,» said Paul Barrett, policy adviser for financial regulation and taxation at the ABI. «If Solvency II terms are as we would like them to be, we will have a world class solvency regime. It has the potential to give European insurers a competitive advantage and would provide enormous benefits to consumers.» But he said insurers should not assume that the UK approach of principles-based regulation would automatically be translated into the Solvency II proposals.