Excessive regulation threatens London market
Excessive regulation and multiple layers of capital standards potentially threaten London’s position at the heart of the insurance and risk-transfer world, the International Underwriting Association (IUA) has warned.
The IUA has identified four critical challenges facing the London company market in 2014. The body believes that each must be successfully tackled for London to maintain its position as a pre-eminent centre for internationally traded insurance risks.
“London has no automatic right to expect insurance business from around the world. The company market must continue to attract clients by offering reliable, efficient, innovative and cost-effective services,” said Malcolm Newman, chairman of the IUA.
“During 2014 the development of the four issues will have a major impact on the market’s continued competitiveness. If companies can rise to these challenges London will be a more attractive place to do business.
“There are strong international dimensions to many areas of our work in 2014 and the IUA will give its full support to the market in assisting companies to be successful meeting demands from around the world.”
The first challenge the IUA identifies is ensuring international capital standards do not give rise to an additional layer of supervision on top of national regulation. The organisation points out that there are now a number of global regulatory initiatives emerging under the banner of the International Association of Insurance Supervisors (IAIS).
“Ultimately regulation of cross border re/insurance should be seamless, operating with clarity and transparency whilst recognising differences in cultural practices between individual markets. But work on capital standards, now underway by the IAIS and the Financial Stability Board, should not be duplicative of existing rules. The IUA will focus its active lobbying on attaining this goal, working with Insurance Europe and others to give a clear set of messages,” the IUA said.
The second challenge is for the industry to develop an effective understanding and relationship with the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). “During 2014, on issues such as the establishment of early warning indictors, companies will need to engage with regulators assisted by the IUA providing a common shared platform for such discussions to take place,” the IUA said.
The third challenge is to develop a new joined up market modernisation strategy while the fourth is that the market must innovate new products and develop new markets, the industry body said.
