UK insurance sector grows by over 10% since introduction of Solvency II

Written by Oliver Wade

01/03/2018

The UK insurance sector has grown by over 10 per cent since the introduction of Solvency II, whilst returns on equity have remained steady at above 9 per cent for larger insurers, PRA CEO Sam Woods has said.

Speaking at the Association of British Insurers (ABI) conference in London this week, Woods said "there is simply no evidence to suggest that the introduction of Solvency II has crushed the profitability or growth of UK insurance companies”.

Woods further reported that “there is no convincing evidence that Solvency II has driven up prices for UK insurance policyholders”.

When the PRA conducted their assessment on the introduction of Solvency II, the average motor and household premiums, and changes in premiums, were not included as rates had been hardened in 2015 due to greater loss experience and UK motor insurers were particularly affected by reduction in the Ogden rate that came into effect on 20 March 2017.

“The limited impact of Solvency II on pricing should not surprise us, given that the running costs of the new regime represent 0.07% of insurance premiums in the UK, which you could think of (for instance) as 35p on an average motor policy premium last year of £493,” Woods added.

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