The Treasury Committee publishes its Report on the Solvency II Directive—a harmonised EU-wide insurance regulatory scheme.
In response to the practical difficulties of the Directive, the Report recommends that the Prudential Regulation Authority (PRA) should have a pragmatic discussion with the insurance industry. This should focus on the scope for amendments and increased proportionality in the implementation of the Directive.
As well as the PRA's primary objectives, it has a secondary objective, which is to "facilitate effective competition". The Committee recommends that the Treasury should consider giving this objective equal primacy.
Commenting on the publication of the report, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:
"The UK insurance industry managed investments of over £1.9 trillion in 2016 and paid nearly £12 billion in taxes to the Government. We should not ignore the consequences of Brexit on this important UK industry, nor the way that it is regulated irrespective of Brexit.
The implementation of Solvency II in the UK has come at a considerable cost. Industry and the PRA do not appear to be aligned on some key issues, including the impact on consumers. They should agree what is best for UK industry and consumers as a matter of urgency.
They should develop a roadmap that provides a prudent regulatory structure without stifling competition and innovation.
Such a roadmap should both inform the Brexit negotiations and reflect the opportunities afforded post Brexit to develop the international competitiveness of the UK insurance industry."