The annual cost of regulation and compliance for the UK insurance sector now exceeds £730 million, according to research from law firm Reynolds Porter Chamberlain (RPC).
Data from the Association of British Insurers shows that gross annual written premiums for general insurance were £73 billion in 2010, the direct costs of insurance for UK insurers are likely to total well over £730 million per year. An average, this means that the cost of regulation roughly equates to one percent of gross written premiums for each company.
Steven Francis, partner and head of financial services regulation at RPC, said that this figure is quite astonishing, given that it only accounts for the direct costs of regulation, such as salaries for compliance workers and the FSA levy.
“The UK Government needs to guard against European and UK regulators heaping extra costs on the general insurance sector as part of the overall trend to subject everyone in the financial services sector to collective punishment. After all, these extra costs normally have to be absorbed by the customer,” he said.
RPC found that, on average, regulatory costs for insurers have increased 75 percent over three years, although some companies reported an increase of over 400 percent.
Reynolds Porter Chamberlain, regulation, compliance, Association of British Insurers