Refine Solvency II, not replace it, say UK insurers

UK insurers are calling for regulators to refine Solvency II to make it more appropriate for the UK market, rather than replace it entirely when the UK leaves the EU.

In response to the Treasury Select Committee inquiry into Solvency II, the Association of British Insurers (ABI) noted Solvency II is broadly fit-for-purpose for the UK market and there is no appetite from its members to withdraw from or completely replace it. The focus should instead be on making changes that would help customers, support investment in infrastructure to grow the economy, and ensure the UK remains globally competitive and a leader in the insurance market.

The ABI proposes a number of changes to Solvency II to be reflected in the future UK regime, including to the risk margin, removing barriers to long-term investments, and reducing the Solvency II reporting requirements. The ABI said that in order to avoid insurers being stuck in “regulatory limbo”, it proposed that Government adopts the EU Solvency II text directly into UK law following Brexit, and supports the Prime Minister’s proposal for a Great Repeal Bill.