Julian Adams, Deputy Head of the Prudential Regulatory Authority and Executive Director of Insurance, has given a speech focused on the Bank of England’s (BoE)
role in supervising insurance companies, detailing:
- how the BoE through the PRA has adapted its supervisory approach to take account of lessons learned from the financial crisis; and
- how the BoE is applying its supervisory approach through various examples, including the impact which alternative capital providers may be having on parts of the London Market.
He detailed five lessons that the BoE can draw on from its experience of dealing with the financial crisis which are every bit as relevant to the insurance sector as to banks:
- the need for a prudential supervisor to focus on the risks that might materialise for firms in the future, not just how a firm is placed today or how successful it may have been in the past;
- the understanding that for some issues it is not enough to just look at the risks within individual firms and address them at an individual firm level;
- it is not enough to focus on static point-in-time assessments of firms’ solvency positions;·
- the need for clarity about the objectives of prudential regulation; and·
- the need to have multiple reference points when assessing firms’ capital positions.