BoE to focus more on protecting insurance policyholders


Reuters

By Huw JonesLONDON, March 20 (Reuters) - The Bank of England will spell
out more clearly what insurers should be doing to protect
policyholders such as the elderly after a report called for
clearer safeguards.
    The BoE's Independent Evaluation Office (IEO) looked at how
the central bank's supervisory arm, the Prudential Regulation
Authority (PRA), ensures policyholders are properly protected.
    The IEO said on Monday that the PRA's "articulation of its
policyholder protection responsibilities appears to be
unfinished business".
    PRA work on policyholder protection had been "crowded out"
by "live supervisory issues" and the need to implement European
Union capital rules known as Solvency II by January 2016, the
IEO said in a report.
    The BoE's supervisors need to articulate fully their
approach to protecting policyholders, though there was no
evidence that PRA supervisors were falling short of their
duties, the IEO said.
    The PRA should also ensure there is appropriate coordination
with its sister regulator, the Financial Conduct Authority.
    BoE Deputy Governor and PRA Chief Executive, Sam Woods, said
the IEO's assessment was informative and balanced, and that the
PRA has agreed a set of actions in response.
    The PRA will be clear that it does not seek to protect all
policyholders equally, but will direct more of its resources to
those who would suffer greater financial hardship if their
policies did not pay out as promised, Woods told the London
Business School in a speech.
    Britain's exit from the EU has also raised hopes in the
sector that Solvency II will be overhauled, but Woods reiterated
there would be tweaks, rather than a broad overhaul.
    Woods said the debate about Solvency II has become a
"cacophony of acronyms" emanating from a "magic circle of
insurance enthusiasts".
    "But strip this back and you'll see there is an essential,
irreducible human core to it all," Woods said.
    "Some of the oldest and most vulnerable in our society have
invested their life savings into long-term annuity contracts,"
Woods said.
    "So when we talk about promoting insurers' safety and
soundness, and protecting their policyholders, this is what we
have in mind."

 (Reporting by Huw Jones; Editing by Alexander Smith)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))

Keywords: BOE INSURANCE/REGULATIONS



This article appears in: Economy , Stocks , World Markets


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