The Financial Services Authority (FSA) had a dual mandate back in the day: it was concerned about solvency but it had to balance this against the need for the industry to remain competitive.
The FSA has gone, and things are different today.
The focus of the PRA is solvency. Its primary responsibility is to ensure that claims are paid, not that the industry lives to fight another day.
This matters because speed and flexibility are of the essence in a catastrophe.
Firms have days rather than weeks to raise new capital when disaster strikes.
In 2001, the regulators were prepared to tell them to go for it without first demanding lengthy reviews and modelling.
But even then, the market was left standing by Bermuda, which attracted roughly 10 times more new money than Lloyd’s of London. This pattern has been repeated after every disaster since.
So the big question for next time is whether the regulator will be sufficiently switched on and nimble.
The test showed how some underwriters and companies were not properly organised internally to cope with multiple disasters but it showed up the PRA even more.
The regulator appears quite shaken by the number of people it needed to call here and in America, and how fast it was expected to move.
Communication and understanding are clearly inadequate at the moment; the test will be whether the report provides a sufficient spur for the needed improvements.
Even then, it may not be enough.
If responsibility for solvency rests with the PRA, responsibility for the future competitiveness of the insurance industry now resides in the Treasury. This is not encouraging.
When the 2008 financial crisis erupted, the FSA, the Bank of England and the Treasury were supposed to share responsibility for sorting things.
Instead, they wasted precious time knocking seven bells out of each other, covering their backs and lobbying behind the scenes to divert the blame.
But a positive sign is that the Treasury has kept a close watch on the current exercise, so perhaps it might be different next time.
The other thing that will be crucial, but which the stress test could not probe, was the attitude of foreign jurisdictions.
This is key because insurance is a truly international business, but global regulation tends to become very local in a crisis. Everybody likes to look after their own, and cares little about helping out with problems elsewhere.
Thus at the time of 9/11, the UK Government in essence told the insurance industry to do whatever it took to get aircraft flying again.
The industry delivered — only then to have the EU competition authorities launch an inquiry into collusion in the aircraft insurance market. Even more difficult for the London market was the attitude of the American authorities.
London was looking for co-operation to help navigate through the mess, but the concerns and focus of Americans was relentlessly domestic.
Its officials made it abundantly clear almost as soon as the British got off the plane at Kennedy Airport that they really did not care what happened in London or whether its insurance market survived or not.
Of course, with Prime Minister Theresa May’s new best friend in the White House, it may be different next time.
But again that is probably not the way to bet.
If London is going to bounce back from the next disaster — one which is perhaps a bit overdue, given how benign the claims environment has been in recent times — everyone in the market needs to think through in advance what they will have to do, and the regulator will have to find the nerve and vision to help them do it.
