However, new market entrants can provide policyholders with a greater degree of choice of product and coverage options that may be otherwise unavailable, challenge existing business models and practices, and help to ensure that the insurance market remains efficient. An unnecessarily prolonged application process can itself be a barrier to attracting new entrants to the UK market. We are considering ways in which the process of obtaining authorisation for new insurers can be made more efficient whilst still ensuring appropriate prudential standards. One aspect of this work where we have already made progress is ensuring that we are clear on the information we require from applicants. However, to some extent our ability to authorise new insurers remains dependent on the openness of applicants to discussing their proposed business models and the speed and accuracy with which they provide information. We have shown through recent decisions that where an application meets our requirements we are capable of taking a decision quickly, with on average the total time taken to reach a decision now standing at seven months. There are also some specific barriers to entry for small start-up insurers in particular.
I would argue that far from being in conflict, competitiveness and high prudential standards complement each other – you cannot have one without the other. The UK’s status as a pre-eminent, global insurance market depends heavily on the robustness of the infrastructure within which it operates: a reliable legal system, for example, and a robust regulatory regime that allows policyholders, reinsurance cedants, and other counterparties to transact with confidence. I know that different parts of the market have different priorities. For some parts of the UK insurance sector – particularly life insurance – the priority is to address areas of Solvency II that you feel do not work as well as they could, whilst for others of you the primary focus is on maximising international market access. Some of the changes to the prudential regime that we are considering within the review of Solvency II should result in changes across the sector: such as the reform of reporting requirements, and streamlining our approach to approval of internal models, all which should affect a wide range of firms; others, such as reviewing the design of the risk margin and the matching adjustment, will focus more on the life insurance sector. At the same time we remain open to international participation in the UK insurance market, engaged more than ever in international policy making and active supervisory co-operation and fully supportive of the international activity of insurers based here. We are maintaining strong, cooperative working relationships with regulators in other jurisdictions, bilaterally and through colleges.