John Glen, the Economic Secretary to the Treasure and City Minister, UK, has reportedly announced that the UK government will be cutting down on red tape by introducing new reforms to regulation of the country’s insurance sector, effectively unlocking billions of pounds worth of investment, and making the most of the nation’s post-Brexit freedoms.
At the Association of British Insurers Annual Dinner, Mr. Glen unveiled the plans for slashing the EU red tape to unlock growth and investment for the country’s infrastructure, while delivering on the benefits of Brexit and ensuring that businesses can use their earnings towards innovating, investing, and creating more jobs.
UK’s insurance sector has been under the regulations of Solvency II since it was first introduced in 2016 to harmonize regulation in the sector across the EU.
However, Mr. Glen said that as they are primarily EU-focused, rules-driven, and burdensome, which is why they will now be reformed to become easily adaptable, agile, and UK-focused.
Glen also added that the new regime will help in market development, support new and innovative firms, and allow the release of capital for product investment.
He also stated that policyholders will be safeguarded under the new reforms, ensuring that the overall level of policyholder protection remains strong.
The news follows a policy paper published by the UK government a few weeks ago, explaining how the country will become one of the best-regulated economies globally, by using its new freedoms.
Prime Minister Boris Johnson had also earlier announced that a new Brexit Freedoms Bill will be introduced to end EU law’s special status in the nation’s legal framework.
The reforms to Solvency II have been developed by HM Treasury along with Prudential Regulation Authority and include a significant risk margin reduction, reduction in current reporting and administrative burdens, sensitive handling of credit risk, and a substantial increase in flexibility.
These reforms are expected to create tens of billions of pounds worth of opportunities in the region for insurance firms, so they can invest in long-term capital and help in the growth of UK infrastructure.