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Mark Carney targets insurance bosses with new accountability regime

Bank of England governor Mark Carney plans to create a new regime to hold senior insurance industry executives to account in the event of failure.

In a comment piece for The Times, Carney says the post-crisis challenges facing the insurance sector – including low interest rates, regulatory reform and legislative changes – could place a strain on insurers’ business models.

“These challenges could lead insurance companies towards new classes of business, less traditional types of investments, or new opportunities in emerging markets,” Carney says.

“This is not necessarily a problem, but the Bank of England, which now supervises Britain’s insurance companies, will be vigilant to the risks in any such moves.

“Our supervisors focus on what matters: they take a forward-looking and judgment-based view of whether insurers’ business models and strategy could threaten policyholders or the wider financial sector in future. If we think that managements’ actions today pose a risk tomorrow, we won’t hesitate to step in.”

In response, Carney says the Bank will create a new set of rules to hold insurance bosses to account in a similar way to senior bankers.

He says: “What the Bank of England won’t do is protect insurance companies from the consequences of their own decisions.

“It is for boards to run their companies, and for those who manage insurers to be accountable for their actions if things go wrong. So, alongside reforms that Parliament has asked us to make to hold senior bankers to account, we will create a similar regime for senior managers in the insurance industry.

“Integrity, honesty and skill are not optional, whether you run an insurance company, global investment bank or building society.”

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Comments

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  1. Julian Stevens 22nd May 2014 at 11:06 am

    How about a new regime to hold senior regulatory executives to account? Should there not be some sort of quid pro quo?

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