Sam Woods: Solvency II - striking the balance

Speech (virtual) by Mr Sam Woods, Deputy Governor for Prudential Regulation of the Bank of England and Chief Executive of the Prudential Regulation Authority (PRA), at the Bank of England Webinar, 8 July 2022. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

The UK's post-Brexit review of insurance regulation is entering a critical phase, with important decisions shortly to come for us, government and Parliament. With that in mind I thought it would be useful to highlight some of the key points from the Prudential Regulation Authority's (PRA's) perspective, while HM Treasury's current consultation on Solvency II is ongoing, with a particular focus on the main point of contention between us and parts of the industry.

My main message is this. Following Brexit we have a once-in-a-generation opportunity to re-shape insurance regulation to work better for the UK. We can do this while loosening parts of the regime which were over-calibrated by the EU and making it easier for insurers to invest in a wider range of assets, but we also need to strengthen it in one area in order to avoid risks to the millions of current and future pensioners who rely on insurers for their retirement income. The combined effect of these changes should support the government's objectives for competitiveness, growth and investment in the economy.