ABI criticises PRA power to protect future policyholders

The Association of British Insurers has criticised the Government’s decision for the Prudential Regulation Authority to protect future policyholders in its insurance objective.

The Financial Services Bill, published last week, gives the PRA the general objective of promoting the safety and soundness of firms and an insurance objective of contributing to securing an appropriate degree of protection for those who are or may become policyholders.

The insurance objective was only included after heavy lobbying from the ABI over concerns that the PRA would be too focused on banking regulation.

An ABI spokeswoman says: “They could be policyholders in two days or two years and so looking at capital and solvency, it is difficult to see how you protect policyholders who do not exist. How do you know what risk they pose? We would prefer it was not in there.

“Looking after people who may become policyholders makes sense on the conduct of business side but not on the prudential side.”