The FSA is working with regulator’s across to Europe to try and ensure a level playing field for insurance firms based in the UK and those passporting in.
Around one third of insurers operating in the UK passport in from the European Economic Area and the Prudential Regulation Authority has warned it will have little direct power over them, despite wanting them to meet the same standards as UK based firms.
Speaking at a joint Bank of England and Financial Services Authority conference this morning, which set out the PRA’s intended approach to insurance regulation, FSA head of insurance Julian Adams (pictured) said the PRA needed to be able to influence other European regulators.
He said: “Firms from other European countries should be subject to the same standards as UK regulated firms. The harmonising effects of Solvency II will go a long way to achieving this, but host supervisors have minimal prudential powers under the directive, so we want to try and influence home state supervisors to ensure levels of policyholder protection and arrangements for resolution are consistent with UK standards.
“What we are trying to do is build good, effective bilateral relationships with the key overseas supervisors whose firms have extensive presences in the UK but also we will have the ability to take part in supervisory colleges both of which will be very important.”
The PRA objectives for insurance firms aim to ensure the safety and soundness of firms and to provide an appropriate degree of protection for insurance policyholders.
The discussion paper outlining the PRA’s approach to insurance regulation says collaboration with other European regulators, the European Insurance and Occupational Pensions Authority and the International Association of Insurance Supervisors will help assess risks non-UK insurers pose to the PRA’s objectives.
PRA chief executive designate Hector Sants warned that while it will seek to influence the regulation of non-UK firms, people should be aware that the PRA will not be responsible for their regulation.
Sants: “Clarity of understanding as to what we are and are not responsible for is important. We do have very limited powers for prudential regulation of branches, both for banks and insurance so yes we will seek to play an active part and we can bring value to the oversight of those institutions but policy holders need to understand they are relying on the oversight of the home regulator in relation to prudential issues.”
Out of 1,094 insurance firms who operate in the UK 371 are authorised in the EEA.