Three main parties promise not to treat insurers the same as banks
The insurance industry will not be treated like the banks, and will not be subject to over-regulation, the three leading political parties promised this week in a bid to stem the flow of financial services companies fleeing overseas.
Financial secretary to the Treasury Stephen Timms, Conservative shadow financial secretary Mark Hoban and Liberal Democrat shadow chancellor Vince Cable – all of whom will be appearing at Insurance Times’s second Leaders Forum today – praised the industry for weathering the financial storm.
Timms said he could reassure insurers that there was “no need [for] dramatic regulatory change”.
“I want to underline the importance that the government attaches to the insurance sector,” he said. “It has borne up pretty well through a very, very testing period in the financial markets. That reflects well on the industry and the way it has been regulated.”
Timms emphasised that the UK insurance sector was the “second largest in the world” and said the government would continue to work with industry on measures to maintain its competitiveness.
Speaking at the Conservative party conference in Manchester last week, Hoban – who outlined in Insurance Times last month the Tories’ plans to scrap the FSA and hand responsibility for supervision of financial institutions to the Bank of England – promised the Tories would not increase regulation. He said: “High costs will force people out of the sectors, reducing the providers. If we over-regulate a sector we are likely to see people leave that sector.”
Hoban dismissed suggestions from the ABI’s director of general insurance and health, Nick Starling, over whether insurers would be drawn into “inappropriate regulation” alongside banks. “We will make sure that the regulatory architecture does reflect that difference and there are capital regimes for insurers and banks.”
Biba’s head of compliance and training, Steve White, added: “We are pleased that the efforts we put in with regards to contract certainty, transparency, conflicts of interest and disclosure were recognised as an alternative to prescriptive rules. We are hopeful to be able to bring some influence to bear on the Conservatives’ plans for possible future regulation to our sector.”
Interviewed in Insurance Times this week, Cable dismissed the insurance industry’s calls for lower corporation tax, saying the country should not get sucked into a “race to the bottom” (see page 20).
He said the Lib Dems would provide greater certainty over tax and regulation.