Growing government interest in insurance should be a good thing but what happens if the approach is more brawn than brains?
Yesterday the prime minister took up the cudgel against Solvency II, calling the regime a “good example of ill-thought-out EU legislation” during prime minister’s questions.
David Cameron and mayor of London Boris Johnson have been prompted to act on Solvency II after Prudential warned that it could leave the UK over the cost of complying with the legislation. Prudential is concerned that the rules of Solvency II would mean it would be forced to hold extra capital against its US operation, Jackson Life.
Cameron and Johnson must be worried that if Prudential leaves, it could set a precedent that more insurers would follow, and the last thing the government wants is a stream of big financial businesses leaving the country.
Cameron said that the government was “working extremely hard at the European level and with the Prudential” to find a solution. There are no signs yet what any solution will look like, but it is clear that government and opposition alike are taking an increasing interest in the insurance sector. Government interest in insurance heartening, but there is a danger that well-meaning politicians can miss some of the intricacies of the sector and provoke the anger of the industry as a result.
Unfortunately, the list of recent cases is quite long. Labour’s insurer-bashing announcement on telematics yesterday is a good example, but the list also includes the gender ruling, lack of government action on flood insurance and Jack Straw’s views on motor insurance and postcode pricing.
Tottenham MP David Lammy panned insurers over how they were handling claims from the UK riots last Autumn, and some MPs’ proposed amendments to the consumer insurance bill were also badly thought out and would have upset the balance of the legislation had they been granted.
Fortunately, the insurance trade bodies and the all-party parliamentary group on insurance have been making headway in getting the insurance perspective heard in the corridors of power. Let’s hope that there is enough goodwill and understanding from the government in return.