LONDON, March 20 (Reuters) – The Bank of England said it
will devote greater effort to ensuring more consistent
protection for those who would suffer most if their insurance
policies do not pay out as promised. The move follows a review by the central bank’s Independent Evaluation Office (IEO), published on Monday, which looked into
how the BoE’s supervisory arm, the Prudential Regulation Authority (PRA), ensures that policyholders are properly protected. PRA work on the issue had been “crowded out” by “live supervisory issues” and the need to implement European Union capital rules known as Solvency II by January 2016, the IEO said in its report. The PRA’s “articulation of its policyholder protection responsibilities appears to be unfinished business”, although there was no evidence that PRA supervisors were falling short of their duties, the IEO said.
BoE Deputy Governor and PRA Chief Executive, Sam Woods, said the PRA does not seek to protect all policyholders equally and will direct more resources to those who would suffer greater financial hardship if their policies do not pay out as promised.
Continue Reading “British regulator to focus more on protecting insurance policyholders” at Nasdaq News
The Bank of England has dealt a blow to UK insurers hoping for a quick fix to what they see as the most onerous aspects of EU capital requirements.
The insurance industry has been campaigning for a more lenient interpretation of EU rules known as Solvency II. Some insurers have accused the central bank of “gold plating” the regulatory regime, which is supposed to be applied equally across the EU.
But in a speech to the Association of British Insurers on Tuesday, David Rule, the BoE’s head of insurance supervision, said its implementation of Solvency II had been “robust but proportionate” and played down the potential for immediate changes.
Continue Reading “Bank of England defends implementation of Solvency II rules” at Financial Times
The Bank of England has made life easier for insurers by relaxing the rules on how they have to respond to market movements.
The EU’s Solvency II capital regime, introduced at the start of this year, makes insurers mark their assets and liabilities to market.
When market interest rates fall — as they have done recently — the value of life insurers’ long-term liabilities rises, potentially creating a hole in their balance sheets.
Continue Reading “Bank of England relaxes rules for insurers” at Financial Times
The Bank of England has sent out a sharp warning to insurers over deliberate attempts to cut capital requirements
The move comes amid renewed debate about capital levels in UK banks, and just weeks before most of the UK’s insurers report their financial strength under the new Solvency II regime.
In a speech to Ilag, a life insurance trade body, Andrew Bulley of the Bank of England said the Bank would be keeping a close eye on any changes that the insurers propose to the way they calculate their capital needs.
“Whilst we are, of course, open to model improvements and refinements, we will bring to bear an appropriate scepticism where the only rationale for such changes is manifestly and consistently that of reducing capital requirements,” he said.
Continue Reading “Bank of England warns insurers against cutting capital requirements” at FT Advisor News
The UK government and regulators have launched a push to change key aspects of the new Solvency II regime for insurers — citing concerns that is making some companies less competitive.
In submissions to the European Commission late last week, the Treasury and the Bank of England highlighted areas that they would like to see altered, with the government calling for a wider and earlier review of the rules than is planned.
Solvency II, which took 13 years to develop and cost billions of pounds to implement, came into force on January 1. An initial review of the rules’ impact is due to take place in 2018.
“Our experience of implementing Solvency II to date is already raising issues around the impact of the framework on long-term investment and competitiveness of the European insurance industry,” wrote the UK Treasury in its submission.
Continue Reading “UK fears that rules harm insurance competition” FT Advisor
The heads of Britain’s twin financial regulators said more detail is needed on David Cameron’s deal to allow the City to object to Eurozone financial regulations.
Andrew Bailey, the head of the Bank of England’s Prudential Regulation Authority, told the Treasury select committee that more is needed to understand what the deal will mean in practice.
The bit about ‘respecting the rights and competences of the non-participating member states’: taken as a piece of legislation, that’s a good piece of language, but […] where’s the substance? That’s what is still being negotiated,” Mr Bailey said.
He was referring to a part in the draft settlement that refers to economic governance, where it pledges to prohibit “discrimination” of a particular currency, and adds that while eurozone members move towards an ever-closer union, different rules may be needed to be applied across the EU when it comes to financial regulation.
Continue Reading “Financial regulators call for more detail on EU referendum deal” at FT Advisor
Bank of England governor Mark Carney said that BoE is keeping an eye in real estate investment trusts as sudden increase in commercial real estate properties can result to “concerns about financial stability.
” According to reuters.com, Carney addresses the European Parliament’s economic affairs committee and said “We are watching some developments including…in the publicly traded commercial rest estate market, the unit-trust market, to ensure that is not a potential amplification channel of financial instability.”
Though Carney also noted that no actions are being made by the UK, monitoring the market “makes sense” as commercial real estate is the market where “British banks have taken large losses in downturns.”
In a report by telegraph.co.uk, deputy governor for financial stability Sir Jon Cunliffe said “prices in London were particularly stretched” and that their latest Financial Stability Report reveals that prime offices in West End are “overvalued.” Carney also noted that Solvency II rules for the insurers are needed to be…
Continue Reading “Bank of England Needs to Monitor Commercial Real Estate Market — Carney” at Realty Today
The Bank of England is monitoring insurers from outside the European Union that are winning pension liability business in the U.K., a person familiar with the matter said.
By not having to comply with Solvency II regulations, insurers from outside the 28-nation political bloc can offer lower reinsurance pricing by holding less capital against longevity risk.
The BOE is uneasy because it wants to ensure that policyholders are protected if the balance sheet of a non-EU insurer comes under pressure, said the person, who asked not to be identified because the matter is private. A spokeswoman for the BOE declined to comment.
U.K. insurers and pension funds are buying reinsurance to help ease capital requirements before the new laws are introduced and to protect against the chance that their policyholders live longer than forecast.
Continue Reading ” BOE Said Uneasy About Foreign Insurers’ Pension Liability Deals ” at Bloomberg Business
Reuters) – The Bank of England said on Friday that it would apply new European Union insurance regulations “proportionately”, following industry fears that the central bank might seek to add extra rules for companies based in Britain.
The so-called Solvency II rules, which take effect in 2016, aim to ensure that insurers such as Britain’s Prudential (PRU.L) and Aviva (AV.L) hold enough capital to honour policyholder commitments even when markets turn sour.
In a statement on Friday about how he intended to police the rules, BoE Deputy Governor Andrew Bailey said the British insurance industry already managed risks in the way the rules intended, unlike elsewhere in Europe.
Continue Reading “Bank of England says will apply new insurance rules ‘proportionately'” at Reuters News