On 11 October 2016 Cooley hosted a breakfast forum on the House of Commons Treasury Select Committee Solvency II Inquiry. We collated the views of those attending the forum and a few others who had not been able to make it and submitted a note of those views to the Committee. The Committee has now published its report (Treasury Committee publishes Report on EU insurance regulation) and we are pleased that the evidence that we submitted has been taken into account in the Committee’s findings and recommendations.
Specifically the Committee referred to the evidence we submitted at paragraph 55 of its report when recording that the overwhelming view was that the industry did not want to throw away the huge amount of time, effort and cost put into implementing Solvency II or risk any fundamental changes at this time, particularly with Brexit looming.
Other areas of concern raised in Cooley’s forum are addressed in the Committee’s report:
- The PRA’s implementation of “rules” has a disproportionate impact on costs and competitiveness. The Committee says that the PRA needs to ensure that its supervisory approach reflects a balance between its prudential and competition objectives. The PRA is urgently asked to review its practices in relation to the review and approval of Internal Models and amendment to those models and to report to the Committee on proposed changes.
- The report records the evidence that the regular reporting requirements are costly and overly detailed. This was a particular concern of those attending the Cooley forum. The Committee believes that the requirements could be streamlined and said that the PRA should review the information collected and assess it in the context of both usefulness and cost effectiveness.
- The Committee says that the insurance industry should be regarded as a priority sector during the Brexit negotiations aiming for a far more comprehensive reciprocal agreement between the U.K. and the EU than the agreements that the EU currently has with Switzerland and the US. At the very least, the Committee says that the Government needs to address the urgent issue of pre-Brexit cross border contracts, perhaps through the mutual recognition of pre-Brexit insurance contracts written in UK or EU member states.