February 25, 2020 / 3:33 PM / a month ago

Bank of England: UK insurance rules need more flexibility after Brexit

LONDON, Feb 25 (Reuters) - More flexibility is needed in capital rules for insurers that Britain has inherited from the European Union, but there won’t be a wholesale ditching of the bloc’s rules despite Brexit, a senior Bank of England (BoE) official said on Tuesday.

BoE executive director Anna Sweeney, co-leader for the insurance sector, said EU regulators were now considering whether the “risk margin” in the capital rules needed amending, a longstanding request from insurers.

The risk margin refers to the potential cost for a failing insurer to transfer its policies to a third party and does not cover actual expected claims.

Britain left the EU in January and will apply the bloc’s rule until December, after which it has an opportunity to change UK financial rules.

This won’t mean full-scale ditching of the EU capital regime and returning to the system Britain had before the bloc’s rules were introduced four years ago, Sweeney said.

“I don’t think we are saying we want to go necessarily all the way back, but some of the flexibility we had in that regime would be a good thing,” Sweeney told the Association of British Insurers’ annual conference. (Reporting by Huw Jones, Editing by Lawrence White)

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