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ABI: UK insurers must keep EU links

Thursday 26 January 2012 – by Karina Whalley

The head of the ABI has called on UK insurers to maintain strong alliances with European markets fearing the recent UK veto on the EU Treaty could jeopardise Britain’s negotiations.

During a speech at the Insurance Institute of London on Thursday, Otto Thoresen said British insurers must keep up with the challenges facing EU insurers while still controlling domestic economic drivers.

“We cannot pretend that the recent European veto made our lives any easier – we now face a situation where our European colleagues are more aware of anything we want to negotiate which could look like special treatment for the UK,” the Director General of the Association of British Insurers said.

“It is incumbent on us to maintain strong alliances and to make a strong case for change to those rule changes which could hinder rather than help. We can’t change our geography.”

Thoresen said that UK insurers need to keep adapting to the challenges their neighbours face and ensure that they continue to be an active part of the community.

“At the same time maintaining control of the levers which drive our economy – whether that relates to the level of capital we hold in banks or the taxes we raise on businesses and our citizens,” the ABI head said, speaking in London.

The ABI is using a ‘Twin Peaks’ model for regulatory divisions. The prudential side supervises capital requirements and tax but its focus remains the completion of Solvency II.

Working with the Financial Services Authority, the ABI says there are still some necessary improvements in implementing Solvency II across the UK, including on the calibration of the capital charge for catastrophe risk in the standard formula.

The other regulatory division revolves around conduct and the creation of the Financial Conduct Authority which will become effective by the end of the year and is “another moment of truth” for the UK financial services industry, says Thoresen.

He urged the new FCA’s statutory objectives to emphasise effective competition in order to not just protect consumers but to “get the best” for them.

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