2009-07-08

By Editor, CIR

The Financial Services Authority should resist the temptation to add further insurance and reinsurance regulation on top of those imposed by the incoming Solvency II regime, says the International Underwriting Association (IUA) .

It warns that an additional regulatory burden risks making the UK a less attractive business location and would bring little or no benefit to customers and shareholders.

In its eight-page response to the Turner Review, set up in response to the banking crisis, the IUA says the FSA's existing ICAS regime and the future Solvency II regime already provide robust frameworks for regulating insurance and reinsurance.

"We do not believe that the re/insurance industry poses a systemic risk to the economy at any level, national, European or international. Re/insurance is pre-funded and not highly leveraged. It does not rely on short-term deposits that can be instantly withdrawn...Solvency II already provides an innovative and high quality regulatory framework that meets regulatory concerns effectively," according to the IUA's submission.

Nick Lowe, director of government affairs at the IUA, said the association was concerned that insurance and reinsurance would be affected by the fall-out from moves to tighten regulation of banking.

"There may be a temptation for the FSA to gold-plate Solvency II, but such a response is neither needed nor desirable," he said.

"Any attempt to interfere with the delicate checks and balances already in place under Solvency II would almost certainly make London a more bureaucratic, less attractive place to do business. It might also distort the marketplace and tie up capital unnecessarily, resulting in higher costs to our members and their customers."

Home     More News


Other stories you may find of interest:

IUA: banking and insurance policies must be different
All UK financial services policies must clearly recognise that banking and insurance are different activities with different risk profiles, says the IUA

G20 leaders appeal on insurance regulation
Industry bodies are stressing that new rules for banking may be inappropriate for insurance