Following receipt of evidence from a range of stakeholders, the Treasury Committee has published its report on Solvency 2 and its impact on the UK insurance industry.
The report covers a range of areas including the background to Solvency 2 and the way it has been implemented in the UK, concerns over Risk Margin, proportionality and Brexit. The Committee strongly encourage the insurance industry and PRA to come to an understanding on what aspects of Solvency 2 can be changed unilaterally while the UK remains an EU member state.
Other conclusions and recommendations of the report include:
- The Committee expects a progress report from PRA by 31 March 2018.
- The Treasury should consider giving PRA’s secondary competition objective equal primacy with PRA’s other statutory objectives.
- PRA needs to assess whether it has the skills necessary for effective insurance regulation, particularly at the most senior supervisory and policy levels.
- With regard to Brexit, the report suggests that the Government should consider a bespoke reciprocal agreement with the EU, in a similar but more comprehensive form than the EU has with Switzerland and the US. The report also suggests that the Government needs to address the urgent issue of pre-Brexit cross border contracts, which could be through mutual recognition of pre-Brexit insurance contracts written in UK or EU member states.