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LONDON John Tiner, outgoing chief executive of the Financial Services Authority, called upon the European Commission to move towards a "lead regulator" for insurance."Moving towards a 'lead regulator' as the United Kingdom has proposed will reduce the regulatory duplication and, hence costs, reduce the cost of capital, foster access to all markets across the Union and make our firms more competitive globally," he said.
Mr. Tiner argued that Solvency II, the risk-based capital regulatory regime for insurance slated for introduction in 2010, offered the industry "a unique opportunity...to break out of the old fashioned, some might say protectionist, system of single entity prudential supervision," to move towards a lead regulator for insurance, which would be cost efficient and have the added advantage of increasing the competitive position of the United Kingdom.Mr. Tiner said that, "one significant benefit of the Solvency II proposals is that they better align regulatory capital with the economic capital needs of the business," because that reduces the costs of capital for firms.
Mr. Tiner will step down as chief executive of the London-based FSA, the U.K. insurance regulator, in July.
In a speech to the Assn. of British Insurers' annual conference in London Thursday, Mr. Tiner summarized his achievements of the last six years in relation to the solvency system and the regulation of Lloyd's of London.
Mr. Tiner paid tribute to the management of Equitas Ltd., the runoff reinsurer for the pre-1993 longtail liabilities of Lloyd's syndicates, for reaching a deal under which a unit of Berkshire Hathaway Inc. will assume its liabilities.
He said "through their management of the run-off of liabilities over the past few years and by closing the deal...they have significantly reduced the risks - to names, policyholders and Lloyd's - from one of the darkest chapters in the history of Lloyd's."
In addition, Mr. Tiner called for more to be done in relation to the "unreasonable imposition" made by the collateral requirements for inward business to the United States and said that the progress was "painfully slow." He said that a change in the requirements would increase reinsurance capacity in the United States and reduce premiums.