(Adds Bank of England comments)
By Huw Jones and Carolyn Cohn
LONDON, Feb 23 (Reuters) - Britain's plans to change capital
requirement rules for insurers following its departure from the
European Union are about tailoring them to local conditions
rather than any "gratuitous deregulatory agenda," its financial
services minister said.
Britain inherited the Solvency II insurance capital rules
from the EU, which it left on Dec. 31. But UK insurers and
lawmakers have long called for changes to make the rules more
specific for the sector in Britain.
A consultation by the finance ministry on potential changes
has just ended, with the insurance industry hoping it will lead
to an easing in capital requirements.
"This isn't about a gratuitous deregulatory agenda, but
proportionate and appropriate changes to reflect the situation
happening in the UK," finance minister John Glen told the
Association of British Insurers' (ABI) annual meeting.
The Bank of England has also warned insurers not to expect
any big reduction in capital requirements after Brexit.
Jon Dye, chair of the ABI, said insurers were not looking
for "huge capital reduction at the expense of policyholder
protection".
"There's plenty of scope for practical reform here that
utilises the UK's ability post-Brexit to have a regulatory
system designed for the UK market, not the aggregated needs of
28 countries."
The EU is concerned Britain might use its departure from the
bloc to try to gain a competitive advantage.
Changes to the Solvency II regime could free up 95 billion
pounds ($134 billion), which insurers could use to invest in
areas such as tackling climate change, according to research by
consultants KPMG for the ABI.
Charlotte Gerken, an executive director at the Bank of
England, told a later conference session that "we are not
looking for increase or decrease ... but are interested in the
evidence as to ... what is the amount of capital that is about
right".
Gerken said insurers had been resilient during the pandemic
under the current regime.
($1 = 0.7099 pounds)
(Reporting by Huw Jones. Editing by David Goodman and Mark
Potter)
Aviva (AV.)