In a speech at the ABI Holyrood Reception last night, Kane said insurance firms were not at the centre of the crisis and are not as risky as banks.
He said: “There is a danger that the response to the financial crisis could unintentionally squeeze the life out of the UK insurance industry. We recognise scrutiny will increase, regulation will intensify and we will face closer, more intrusive, supervision.
“But we seek two things. First, any new regulation should not be broad brush and needs to be targeted at risk in the financial system. Second, we must remain in step with other countries. If we don’t, we risk undermining the competitiveness of the insurance sector here in the UK.”
Kane raised concerns about the effect recent tax changes have had on the insurance industry’s ability to remain globally competitive.
He said: “In the current economic scenario we are not naïve enough to begin asking for unaffordable changes to the tax system. But we do need to highlight the corrosive effect recent tax changes have had. This is a real issue. Some insurers have already decided to move their operations overseas.
“Regulation and tax are fundamental to the future competitiveness of the industry. Capital is more mobile than ever before and investors need confidence that they will get a decent and predictable return on their investment. Changes to the regulatory and fiscal environment can and will deter investors from the UK.”
But Kane also recognised the part the insurance industry must play in regaining the trust of consumers.
He said: “Our road to salvation requires us to focus relentlessly on our customers’ needs. We must design simple and transparent products, we need to communicate clearly and we need to deliver excellent service. We have come a long way in recent years, but we need to do more.”