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
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