Insurers set for regulation rethink

BRITAIN'S battered insurance industry faces a radical regulatory overhaul to restore consumer confidence, the Financial Services Authority has revealed.

The move follows the highly damaging disasters at Independent Insurance and Equitable Life. John Tiner, the FSA's consumer, investment and insurance chief, has been asked to complete the reforms of regulation by next September. He will recommend tougher solvency requirements for insurers and greater personal liability for directors.

The FSA said it is already hiring more regulatory staff, and taking a tougher line with insurers under powers delegated by the Treasury. 'It's about smarter regulation, not necessarily more regulation, and rules that are no longer required will go,' Tiner said.

Other topics Tiner will look at include insurers' public and regulatory reporting, reinsurance, appointed actuaries and technical issues such as the use of future profits to bolster solvency.

But he said it would be impossible to design a regime that ensured no insurer ever failed. The FSA's job is to maintain market confidence, promote understanding of the financial system, protect consumers and fight financial crime.