Insurers face new regulatory powers

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The Independent Online
THE Department of Trade and Industry is taking on additional powers to regulate insurance companies, including a new test to ensure they are soundly and prudently managed.

Proposed legal changes needed to implement the European Union's third insurance directives will allow the DTI to obtain information from company offices without a court order and to suspend an insurer's authorisation.

Suspension is regarded as less draconian and more flexible than the existing power of withdrawal, under which insurers are entitled to appeal.

The new and wider management test will enable the DTI to seek the appointment of better-qualified directors even where each member of the existing board is individually regarded as fit and proper. The directives, which will take effect next July, are intended to create a single European market in insurance, enabling insurers to seek business from elsewhere in the Union.

They will bring about wide- ranging deregulation in nations such as Germany, which has traditionally tightly controlled contract design and premium levels.

Neil Hamilton, the Corporate Affairs Minister, said yesterday that the single market 'offers huge scope for British insurance companies in particular because we have always had a much lighter form of regulation which has been no less effective but less bureaucratic and less costly'.

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