Treasury plans post-Brexit overhaul of insurance industry – The Guardian

The Treasury has announced plans to unlock more than 10bn of UK infrastructure investment through a post-Brexit overhaul of the insurance industry.

Announcing a shake-up for the City of London after leaving the EU, the economic secretary to the Treasury, John Glen, said that a comprehensive package of reforms for the insurance sector would help enable UK-based firms to invest more in infrastructure projects.

Speaking at the Association of British Insurers annual dinner on Monday, he said EU-focused rules known as Solvency II would be replaced by a new UK regime that would give insurance firms more flexibility to invest capital in long-term growth projects.

EU regulation doesnt work for us any more and the government is determined to fix that by tailoring the prudential regulation of insurers to our unique circumstances, he said.

We have a genuine opportunity to maintain and grow an innovative and vibrant insurance sector while protecting policyholders and making it easier for insurance firms to use long-term capital to unlock growth.

The move comes as the government pushes to demonstrate there are benefits from Brexit for the British economy, despite official figures showing a dramatic drop in UK trade and ongoing criticism from business leaders over the higher costs and reams of red tape unleashed by leaving the EU.

The UKs insurance sector has been subject to the Solvency II rules since they were introduced in 2016 to harmonise regulation across the EU and promote the stability of firms after the 2008 financial crisis.

Jacob Rees-Mogg, appointed as the Brexit opportunities minister earlier this month, has called for a rewriting of EU financial rules to meet the prime ministers ambition of an investment big bang in Britain powered by the City of London.

However, the plan for a post-Brexit regulatory overhaul is similar to changes already being pursued by Brussels to unlock 90bn (75bn) in European insurance assets, in a process that would also have applied in the UK had it remained a member state.

Under the changes being considered in the UK, the Treasury said there would be changes to enable insurers to invest in long-term assets such as infrastructure and to reduce current regulatory reporting requirements. Glen said that the reforms would still provide safeguards for policyholders from any failures in the insurance sector.

The reforms are expected to create an opportunity worth in the region of tens of billions of pounds for insurance firms to invest in long-term capital to unlock growth, it said.

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Treasury plans post-Brexit overhaul of insurance industry - The Guardian