The UK Government has launched a consultation on radically changing the rules governing insurance companies, intending to allow them to invest tens of billions of pounds more in infrastructure – including green energy.

HM Treasury is proposing changes to the Solvency II regime which governs the prudential regulation of insurance firms in the UK which include:  

  • easing solvency requirements – Reduction in risk margin for long-term life insurers by releasing capital on insurers’ balance sheets. Firms will have more flexibility to invest in long-term illiquid assets such as green infrastructure including offshore wind farms 
  • matching adjustment – Enables insurers to issue long term life insurance products by matching them against assets with similar characteristics 
  • cut reporting and administration for firms 

The consultation, which will run for 12 weeks and will close on 21 July 2022. The Government has announced The Prudential Regulation Authority will publish its own technical consultation later in the year.

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