HM Treasury has launched a call for evidence to support its review of the existing Solvency II regulations.

The move follows the government’s June announcement that it would features of the prudential regulatory regime for insurance firms.

John Glen, economic secretary to the Treasury, said: “We are undertaking this review to ensure that Solvency II properly reflects the unique structural features of the UK insurance sector. By design, the current regime is tailored to the EU insurance sector as a whole but, in several important ways, the UK insurance sector is different.”

He added: “The review will be guided by our objectives: to ensure a vibrant and prosperous insurance sector, to provide long-term capital to support growth, and to uphold high standards of policyholder protection and promote the safety and soundness of firms.”

Huw Evans, director general of the Association of British Insurers welcomed the review and called for additional flexibility.

He said: “As we leave the EU transition period we need a regulatory system that enhances UK international competitiveness and allows insurance and long-term savings companies to invest for the long-term to help tackle climate change and rebuild the UK economy post-Covid.”

He added: “The long-term liabilities of insurance and long-term savings companies make them natural investors for the long-term but the current Solvency II framework discourages investment in sustainable assets and is overburdened with reporting requirements.”

The deadline for responses to the review is 19th January 2021.

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