The rest of the EU is not taking regulation as seriously as the FSA, so what's stopping us from going abroad, asks Elliot Lane
Is Gibraltar fool's gold for insurers? The window of opportunity to dodge the FSA is steadily closing, but as Insurance Times reported last week, a major general insurer still feels it is time to move elsewhere.
Risk-based capital analysis - where the risks on an insurer's accounts are balanced against its assets when measuring its financial strength - will be applied to Gibraltar once the EU's Solvency II project comes into force. Capital analysis will then replace insurer's regulatory returns - in other words, a forensic test on a regular basis.
The FSA has decided to implement the rules to the letter. And many insurers and brokers feel vilified, threatened and chastised. And also angry, because in the rest of Europe, the EU Directive is not being taken that seriously.
In France, for example, the local town mayor has been given the authority to approve which insurance brokers should or should not carry on business. Why? Because they are regarded as respectable civil servants with high morals. Naturally. But what if they are an insurance broker? Slight conflict of interest, perhaps? Perhaps he or she could be vulnerable to cronyism?
An EU spokesman said: "Each member state has the right to implement the rules as they see fit."
Fair enough. So the sole practitioner on the high street in Dover might as well uproot his office, rent space in Le Havre, and commute across the Channel.
If a top ten general insurer were to leave these shores, then the first thing to go would be its headquarters. AXA, Zurich, Groupama, Fortis and Allianz Cornhill are governed by parent companies in Europe and could easily handle the transition.
But on recent performance, these insurers are adequately reserved even over-reserved in some cases. Out of the top ten, one clear candidate could benefit from such a major step: Royal & SunAlliance.
It is close season for R&SA before it publishes its interim results on 4 September, but senior management have told the press that it will announce a restructuring strategy along with the results.
Sources say FSA staff are still "crawling all over" R&SA, but chief executive Andy Haste is renowned for being shrewd. He and his management team should bite the bullet and weigh up the PR fall-out such a decision would generate against the prospect of saving R&SA.
