On the go: The government has published a new consultation on Solvency II, with the aim of helping insurers invest in UK infrastructure and green projects.
The government has already rallied pension funds to deploy capital as part of its “levelling up” agenda.
Local Government Pension Scheme funds were asked earlier this year to set out plans for investing up to 5 per cent of their assets in domestic initiatives.
UK insurers look set to be empowered to provide fresh capital into assets, with the aim of helping the country attain its net zero objectives and level up.
Insurers follow the Solvency II framework, which sets out the prudential regulatory requirements for insurers across the EU over areas including risk assessment and governance.
The consultation will aim at ultimately increasing insurers’ flexibility to invest in long-term UK infrastructure and adopt measures to release fresh capital on to insurers’ balance sheets.
It asks how a reduction in insurers’ risk margin, which is the difference between their technical provisions and best estimate liabilities, would impact policyholders and their level of protection, along with their effect on insurers’ decisions surrounding investment and pricing.
The consultation also asks how the government’s mooted reforms could impact investment in infrastructure including water, clean transport and digital assets, as well as how these changes will help support the UK’s transition to net zero emissions.
“Our reforms will unlock tens of billions of pounds of investment in the UK economy, spur innovation in the market, while protecting policyholders, and will cement the UK’s position as a global hub for financial services,” said John Glen, economic secretary to the Treasury.
The consultation will run for 12 weeks until July 21.
