Charlotte Gerken: Who's concentrating? Trends in the life insurance sector and the need for strong reinsurance and investment risk management

Speech by Ms Charlotte Gerken, Executive Director of Insurance Supervision of the Bank of England, at the Bank of America 27th Annual Financials CEO Conference, London, 20 September 2022.

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

The annex of the speech can be found here. 

Good afternoon and thank you to Bank of America for inviting me today.

The role of insurance is to protect individuals and businesses from uncertainty: to diversify and manage risks that participants in the wider economy cannot diversify and manage themselves. The subject of risk diversification and concentration will be well-understood by this institutional investor audience. I will take a prudential regulatory lens to this subject, focussing on developments in the UK life insurance sector and our supervisory response.

Core to every insurer's business model are the ideas of risk pooling from a large population, leveraging their specialist expertise as long-term investors, making insurance safe and affordable for policyholders and returns attractive to capital providers. Through the provision of long-term finance that is naturally enabled by the long-term liabilities taken on, insurers also play a vital role in supporting risk-taking and growth in the real economy.