Hector Sants spoke on the future of insurance regulation. He covered:
- Solvency II: he spoke about the perceived benefits of the changes Solvency II will make and said only time will tell if the cost of implementation outweighs them. He explained FSA’s implementation strategy and said it would soon be telling firms of the implications of its review of its implementation methodology. He said the review was aimed at saving costs;
- the UK supervisory structure: he discussed the progress so far towards creation of the PRA and CPMA. He said the PRA will supervise around 100 insurers. Insurers pose different risks to banks, and he noted an insurer failure is less likely to be as systemically significant as that of a bank. He discussed the powers CPMA will need, and how it must work closely with the PRA. He said with-profits insurers presented a particular connectivity between prudential and conduct of business issues; and
- the new European supervisory architecture: he stressed the need for the UK to interact with EIOPA and also the European Commission and Parliament.