Treasury financial secretary Mark Hoban has pledged that the regulation of insurers will not play second fiddle to that of banks in the new regulatory set up.
With the abolition of the Financial Services Authority in 2013, micro-prudential supervision of insurers and banks will be the role of the Prudential Regulation Authority. The PRA was only given a specific insurance objective “to provide an appropriate degree of protection for those who are or may become policy holders” after lobbying from the Association of British Insurers.
In a speech to the Insurance Institute in London today, Hoban said the Government recognises the differences between insurers and banks.
He said: “Insurance regulation will not take a back seat to deposit-taker regulation.”
In November, the ABI called for the PRA’s proposed protection of future policyholders to be scrapped saying it would be a more appropriate objective for the future market regulator, the Financial Conduct Authority.
Hoban also welcomed developments in risk modelling technology which enable better risk pricing and customer differentiation, but warned it could end up pricing some out of the market.
He said: “It could cause more segmentation in the market, reduce the tolerance for risk sharing, and potentially cause a shift with some consumers being priced out of the market altogether, leaving them completely uninsured.”