Nick Prettejohn, a highly regarded insurance practitioner, joined the Board of the UK’s Prudential Regulation Authority (PRA) on 10 June 2013. At the time, the Chairman of Court of the Bank of England, Sir David Lees said: "I am delighted to welcome Nick Prettejohn to the Bank of England and to the PRA, where his wide knowledge of the insurance sector will be greatly valued”; before Sir Mervyn King, the then Governor of the Bank of England could add: "I very much welcome Nick’s appointment and I am sure he will play an invaluable part in establishing the Bank’s new judgement-based approach to supervision in the United Kingdom.”
This seems to have been a huge relief to Andrew Bailey, the Chief Executive of the PRA, and a deputy Governor of the Bank of England, because it gave him an opportunity to argue that the PRA understands insurance, and takes it seriously. Bailey made the most of this when he delivered a speech to the ABI the following month. In particular, Bailey argued that: “Insurance supervision is a skill of its own, and while our supervisors do move roles between insurance and banking in both directions, we want to ensure that we have groups of truly expert insurance and banking supervisors”. For that reason, the PRA had established two supervisory directorates: one for general insurance, headed by Chris Moulder; and the other for life, headed by Andrew Bulley. And Moulder and Bulley both reported to Julian Adams, the PRA’s executive director for insurance. Bailey went on to explain that: “Alongside Julian, Chris and Andrew is a policy directorate headed by Paul Sharma … who is a true veteran of insurance supervision”. In addition, “Nick Prettjohn has joined the PRA Board [and] brings extensive insurance expertise to our work”. (My blog on this most unconvincing of speeches is here).
Insurers had been fretting that the PRA didn’t understand insurance; and that it’s approach to insurance was little more than “If it’s good enough for the banks, it's good enough for insurers too” - Daft lot that we are. Sitting at the top of the PRA were 5 insurance experts, so everything was going to be OK.
Since then, of course, Paul Sharma (who really is a true veteran of instance supervision) has left the PRA - a misfortune?
And Nick Prettejohn (another true expert) has just left as well - carelessness?
So, insurers, still think everything’s going to be OK?
(* with apologies to Oscar Wilde, who didn't quite make his point in these terms.)