HM Treasury issues call for evidence as part of SII review

Written by Adam Cadle

19/10/2020

HM Treasury has today issued a call for evidence as part of a review into Solvency II (SII).

The call for evidence is the first stage of the review of SII and is underpinned by three objectives. These include spurring a vibrant, innovative, and internationally competitive insurance sector; protecting policyholders and ensuring the safety and soundness of firms; and supporting insurance firms to provide long-term capital to support growth, including investment in infrastructure, venture capital and growth equity, as well as other long-term productive assets and investment consistent with the government’s climate change objectives.

The government seeks views on how to tailor the prudential regulatory regime to support the unique features of the insurance sector and regulatory approach in the UK. The call for evidence will be open for responses until 19 January 2021.

ABI director general Huw Evans said: “We welcome the government’s review of Solvency II. As we leave the EU transition period we need a regulatory system that enhances UK international competitiveness and allows insurance and long-term savings companies to invest for the long-term to help tackle climate change and rebuild the UK economy post-Covid.

“The long-term liabilities of insurance and long-term savings companies make them natural investors for the long-term but the current SII framework discourages investment in sustainable assets and is overburdened with reporting requirements. This review is an important opportunity to make sure that the UK’s future regulatory regime works for the UK economy and does not place unnecessary constraints on the ability of firms to invest. In particular, a more flexible approach to SII is critical in order to unlock more of the £250bn assets that back UK annuities and could be used for investment in infrastructure and sustainable technology.”

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