Insurance forms a significant part of the financial services industry in the UK. It employs over 300,000 people domestically and is responsible for investments equivalent to around 25 per cent of the UK’s total net worth.
Both at a European and domestic level, increasing the resilience and sustainability of the sector is a key objective. This goes hand in hand with steps to modernise the regulatory regime, and to improve regulatory oversight of the sector following the financial crisis.
The policy agenda for insurance includes:
Achieving structural regulatory reform – Domestically, the Government is committed to deep UK regulatory reform. Regulation and supervision of financial services will be strengthened by giving the Bank of England responsibility for macro prudential regulation and oversight of micro prudential supervision. At a European level, a new supervisory architecture for financial services will enhance both monitoring and responding to risk in the market.
Increasing the resilience and sustainability of the industry – Measures to strengthen capital, solvency and address procyclicality are an essential part of the European regulatory agenda, affecting the insurance sector through regulation such as Solvency II and the Financial Conglomerates Directive (FiCOD).
Improving resolution and consumer protection – Domestically, the Government has consulted on ways to strengthen the administration regime for insurers. In Europe, consultation is underway on the possibility of introducing an Insurance Guarantee Scheme Directive to ensure the protection of policyholders in the event of an insurer becoming insolvent.
The following related consultation papers are available:
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