Financial regulator and insurers told to seize Brexit opportunities
MPs are urging the financial regulator to forge a closer relationship with the £1.9 trillion insurance industry to stop the UK missing out on the benefits of Brexit.
The Prudential Regulation Authority (PRA) has been told to settle its differences with insurers over the enforcement of EU Solvency II rules, which some firms claim are harming consumers by restricting competition.
In a report, the Treasury Select Committee (TSC) called on the PRA and insurers to develop a "road map" for boosting the prospects of the industry post-Brexit, while also pinpointing which regulatory adjustments can be made without changing the EU directive.
Solvency II, which came into force on January 1 last year, makes insurers set aside capital to prove they can withstand a major shock despite the sector displaying a smaller risk to the financial system than banks.
Nicky Morgan, chair of the TSC, said: "We should not ignore the consequences of Brexit on this important UK industry, nor the way that it is regulated irrespective of Brexit.
"The implementation of Solvency II in the UK has come at a considerable cost.
"Industry and the PRA do not appear to be aligned on some key issues, including the impact on consumers. They should agree what is best for UK industry and consumers as a matter of urgency.
"They should develop a roadmap that provides a prudent regulatory structure without stifling competition and innovation.
"Such a road map should both inform the Brexit negotiations and reflect the opportunities afforded post Brexit to develop the international competitiveness of the UK insurance industry."
While the main objective of the PRA is to promote the "safety and soundness" of financial firms, the TSC also wants the regulator to give equal weight to its secondary target of boosting competition.
During an Association of British Insurers (ABI) event earlier this month, Ms Morgan said insurance was "treated as the Cinderella of UK financial services" and should be regarded as a "priority sector" during the Brexit negotiations.