Responding to the government’s latest Solvency II consultation
Matthew Francis, insurance director at KPMG UK, said: “These reforms present a once-in-a-generation opportunity to construct a regulatory regime which is better tailored to the UK insurance market.
“Insurers will want to study the details of the proposals carefully, particularly in respect to how the fundamental spread proposals partially offset the redesign of the risk margin and translate into the 10-15% reduction in capital for the life insurance industry.
“Insurers will also want to consider how they can deploy released capital and how to utilise their balance sheets. These reforms could affect the types and pricing of the insurance products that they offer as well as the types of assets that they hold in their investment portfolios.
“Whatever the final calibration of these reforms, this will be the biggest set of changes for a decade and firms and boards will want to be confident that they have got them right.”
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