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British insurers assoc attacks 'one size fits all' regulation

Friday 15 October 2010 - by Will Henley

The head of the UK’s largest insurance trade body has hit out at European regulatory efforts, suggesting that insurers are at risk of being unfairly treated alongside bankers.

Association of British Insurers director-general Maggie Craig, attacking the EU’s Solvency II proposals, argued that insurers must be given a bigger say "at the top of the table".

Craig said: “We want regulation that reflects that different parts of financial services run different business models and have different risks. One size does not fit all.

“Insurance is not banking, but needs to be equal to banking. It means that insurance should be at the top of the table, not on the same menu."

Solvency II, although broadly welcome, fails to consider the future risk and cash flows of insurance contracts, the director-general said. Its capital requirement standard formula should not become a “constraint” on insurers, she added.

"Although we have come a long way, could we honestly say that in its current form it will achieve all the positive aspirations we have for Solvency II? No."

Craig insisted that the UK insurance industry was not against regulation as a whole, adding that she hoped the International Association of Insurance Supervisors would play a “central role” in setting new standards.

But she warned of “disagreements and compromises” along the way and questioned the fairness of giving the insurance industry just one place on the board of the EU‘s new European Systemic Risk Board, which will monitor risks to the stability of the European-wide financial market.

“I’ll leave it to all your own personal judgments as to whether insurers - with their expertise in risk assessment - are adequately represented by having one member on this board when bankers have 27,” she said.

Craig was speaking on Thursday in London at the Insurance Times Global Leaders' Forum in London.

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