An inquiry has been launched by The Treasury Select Committee into a harmonised EU-wide insurance regulatory scheme Solvency II following Brexit.
The inquiry has caused concern for MP’s who have stated that the directive could ‘impose substantial costs on the sector.’ The committee has also heard evidence suggesting Brexit may allow the opportunity to ignore the rules and that ‘doing so would help insurance companies’.
Before the application of Solvency II, the Association of British Insurers who cover 90% of the UK market, claimed the industry had invested £3 billion in the directive.
Chairman of the Treasury Committee, Andrew Tyrie said: “Brexit provides an opportunity for the UK to assume greater control of insurance regulation.
“The Solvency II Directive came into force in January, only after a heap of concerns had been expressed about it. Among its manifest shortcomings was the failure to secure value for money over its implementation.”
The committee’s term of reference has said that MPs want to consider a variety of options for the UK insurance industry that were created by the decision to leave the EU.
The impact of the directive on the UK’s competition will also be looked at and how insurance meets UK customers needs as well as the UK business economy.
Tyrie said: “The Treasury Committee will now take a look at the Brexit inheritance on insurance to see what improvements can be made in the interests of the consumer.”
After the result of the EU referendum was announced on the 24 June, experts believed that any changes to the directive would be unlikely.