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LONDON, June 7 (Reuters) - Insurers in Britain pledged on Wednesday to use an estimated 100 billion pounds ($125 billion), unlocked by the easing of capital requirements, to invest in green energy, infrastructure and community projects - and not to use it to boost dividends.
Doug Brown, the CEO of Aviva's UK and Ireland Life insurance business, told a parliamentary committee such new investments carried a "slightly higher risk", but brushed aside one lawmaker's suggestion this could lead to industry failures.
"We want to weigh the risks and the benefits ... because we've been around for 325 years. We want to be around for another 325 years and protecting our policyholders is exactly what the regulator wants to do," he told the Treasury Committee.
Changes to Solvency II capital requirements have created the potential for the insurance industry to invest the sum over the next ten years in "productive finance", such as social infrastructure and green energy supply, the Association of British Insurers (ABI) has said.
Asked how much would have been invested in UK Plc over the next year and how much returned to investors, Brown responded: "We have a dividend policy that we reinforced earlier this year, it doesn't change as a result of ... reforms."
Harriett Baldwin, the chair of the committee, took the industry to task over anecdotal evidence pointing to insurance premiums outpacing inflation, insurers refusing to pay out and difficulties in making claims.
Quizzing Brown, Cristina Nestares, the CEO of Admiral UK and Charlotte Clark, the director of regulation at the ABI, she said there was a perception insurers were profiteering during a cost of living crisis.
Nestares said premiums in 2021 had been the lowest in six years, partly because of the COVID pandemic. She also pointed to high inflation and said that internal estimates suggested the cost of claims had risen by 20-30% over the past three years.
"So no, we are not profiteering. We are catching up with this very high inflation," she said.
Britain's consumer price index rose by 8.7% in annual terms in April, down from 11.1% last October, but still one of the highest rates among advanced economies. The country faces surging food costs, a shortage of workers and a heavy reliance on natural gas to generate power and domestic heating.
