[LONDON] Britain's exit from the European Union creates an opportunity to rethink the bloc's burdensome solvency rules for insurers to better serve consumers, British lawmakers said on Tuesday.
Prudential, Aviva and the Lloyd's of London insurance market comply with EU rules known as Solvency II that came into force in January.
Overseeing their implementation was the single biggest task last year for the Bank of England's Prudential Regulation Authority arm, and cost millions of pounds for insurers in systems changes.
"Brexit provides an opportunity for the UK to assume greater control of insurance regulation," parliament's Treasury Select Committee said in a statement. It will open an inquiry into the EU's Solvency II insurance rules.
The findings are likely to shape the new regulatory framework that will be needed once Britain leaves the bloc.
"Among its manifest shortcomings was the failure to secure value for money over its implementation. 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," the committee said.
Britain is the world's third-largest insurance and long-term savings industry in the world, and the largest in the EU, contributing 29 billion pounds to UK economic output in 2012.
Complying with Solvency II has meant that insurers in Britain can write policies and offer other services to customers across the EU.
But once Britain leaves the bloc, it is unclear for the time being if these "passporting" rights will continue in any form.
"Is Solvency II a price worth paying for the passporting of insurance services across the European Economic Area?" the committee asked.
The ABI, which represents the insurance sector in Britain, said it would respond to the parliamentary committee's "pertinent set of questions".
Lloyd's of London and some of underwriters that operate on its market, such as Hiscox, have said they would consider shifting some operations to the EU if there were no passporting rights in order to continue serving continental customers.
The committee will also look at whether Solvency II rules make it harder for UK insurers to compete with their US counterparts.