Insurer warns that tougher regulation could deter capital investment
The growing burden of regulation on the UK insurance industry could lead to a flight of capital from the sector, AXA chief executive Peter Hubbard has warned.
Hubbard said "tougher" regulation in the UK compared to other countries could lead to the UK being an unattractive place to invest capital.
He called on the ABI and individual insurance companies to push the debate higher up the government's agenda.
"There is a fine line above which regulation becomes costly and capital intensive," he told Insurance Times.
"Will the global capital markets continue to allocate key capital to the UK if regulation in the UK is much tougher than everwhere else? I don't think we have reached that point yet, but we must make sure we don't move further."
Hubbard said: "At the moment there is a lot of capital, but if it becomes constrained, then capital could start moving out. I have already seen examples of people taking capital out of the UK to Gibraltar and elsewhere."
He said there was currently a danger of the FSA not acting "proportionately" and he called for regulation to be based on principles rather than prescriptive rules.
"We still don't know the true cost to consumers, but I think the cost could be higher than the ABI's figures."
Analysis by the ABI suggested that FSA regulation costs consumers as much as £360m a year, as it detracted from consumers shopping around for the best deal.
Hubbard said that despite the Treasury's statements on reducing the burden of regulation on businesses, it was "not doing much".
He said: "The debate needs to be bigger than it is. It is up to the ABI and insurance companies [to do this]."
Last month, Biba and the Federation of Small Businesses warned the government that it must do more to combat the disproportionate impact of regulation on small brokers.
AXA defends 'aggressive' business strategy
AXA Insurance chief executive Peter Hubbard has defended the company's "aggressive" strategy for winning business, insisting that its rates are "holding up".
Rejecting suggestions that the company was prepared to cut rates to win business, Hubbard said its commercial lines rates were "in line with where they were last year".
He said the company's gross written premiums in the first quarter of 2006 were 10% up on the same quarter last year.
"We are aggressive in getting new business but our rates are holding up. It's too easy to go into the market to buy-in business," Hubbard told Insurance Times.
"I would like to see rates go up, but I am comfortable with holding them".
For AXA to keep commercial lines rates level compared to last year would be a good performance for the company.
Last week Royal & Sun-Alliance reported that rates had fallen by as much as 4% in some commercial classes in the course of the year.