An influential committee of MPs has launched an inquiry into the effects of Solvency II on the UK’s insurance industry.
The Treasury Select Committee made the announcement in light of a number of concerns which have been raised by industry insiders.
Solvency II is a European-wide regulation that specifies the levels of capital that insurance companies must hold and was more than 10 years in the making.
While he was chief executive of the Prudential Regulation Authority, Andrew Bailey, who is now chief executive of the Financial Conduct Authority, said the history of the EU process on the directive was “shocking” and the implications for costs for insurers and regulators were “staggering”.
Earlier this year Mr Bailey told the committee there are still “unintended consequences” in the regulation which need to be ironed out.
Mr Bailey said the FSA spent £105m on the introduction of Solvency II and that while he did not know how much the industry as a whole had spent but it could be “billions”.
Launching the inquiry, Andrew Tyrie, the commitee’s chairman, said: “Brexit provides an opportunity for the UK to assume greater control of insurance regulation.
“The Solvency II directive came into force in January, only after a heap of concerns had been expressed about it. Among its manifest shortcomings was the failure to secure value for money over its implementation.
“The committee will now take a look at the Brexit inheritance on insurance to see what improvements can be made in the interests of the consumer.”
The inquiry will consider the options for the UK insurance industry that are created by the decision to leave the EU and assess any impact of Solvency II on the competitiveness of the UK insurance industry.
It will also examine the impact of Solvency II on the role of insurance in meeting the needs of UK customers and the wider UK business economy.
Earlier this year Mr Tyrie said its introduction was an “abject lesson” in how not to introduce a law.
