The Reinsurance Advisory Board* (RAB) has published its response to the UK House of Lords’ Industry & Regulators Committee call for evidence into commercial (re)insurance regulation.
The RAB emphasised several points, including that:
- Open reinsurance markets are vital to enable the insurance sector to operate efficiently, to diversify risk globally and to promote the continued growth and resilience of global and national economies. Any barriers to trade in reinsurance undermine the efficiency of (re)insurance markets and lead to higher reinsurance costs and less insurance capacity in the long-term.
- As a cross-border, business-to-business activity, reinsurance should receive special, fit-for-purpose treatment in regulation. In particular, a pure reinsurance branch of an undertaking situated in a country that has been deemed equivalent should be subject to very limited — if any — additional UK regulation with respect to the local UK branch activities.
- An appropriate regime governing the activity of branches of foreign (re)insurers is key to maintaining and promoting the UK as an internationally competitive (re)insurance hub. The recent equivalence decisions in respect to EEA jurisdictions granted by HM Treasury were therefore welcomed by the RAB.
- Prudential supervision of branches should have a high degree of recognition of home state, legal entity supervision that is already in place.
*Insurance Europe provides the secretariat to the RAB.