The UK will slash EU red tape to allow billions of pounds of investment to be ploughed into the economy from City insurers. The reforms to the controversial Solvency II, which sets out the prudential regulatory requirements for EU countries to follow, will allow the UK to make the most of post-Brexit freedoms as part of a Brexit “Big Bang” investment, according to The Telegraph.
This news comes weeks after a Government-published paper stated that the UK’s new freedoms are helping it to become the best regulated economy in the world.
Boris Johnson’s ‘Brexit Freedoms’ Bill has also been brought forward to end the special status of EU law and make it easier to scrap or amend.
City Minister John Glen said at the Association of British Insurers’ annual dinner: “EU regulation doesn’t work for us anymore and the Government is determined to fix that by tailoring the prudential regulation of insurers to our unique circumstances.
“We have a genuine opportunity to maintain and grow an innovative and vibrant insurance sector while protecting policyholders and making it easier for insurance firms to use long-term capital to unlock growth.”
It is expected the changes will reduce the administration and reporting burden on businesses, reduce the risk margin insurers face and increase flexibility to invest in long-term assets.
Sir Nigel Wilson, chief executive of Legal & General, said: “The EU is reforming the Solvency II rules itself, so we need to make the changes or fall behind.
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Both Mr Johnson and Chancellor Rishi Sunak have been urging UK investors to plough more in domestic infrastructure, which over the past few years has been increasingly dominated by foreign wealth funds.
Brexit Opportunities Minister Jacob Rees-Mogg called for a rewriting of Solvency II last Monday, saying it was “ripe for reform”.
Bank of England Governor Andrew Bailey has also been critical of the EU regulation, saying Solvency II was “never well suited” to the British market.