Avoiding the risks of regulatory red tape
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Brexit provides opportunity to slimline costly regulation of insurance market
- The extent of regulation of insurance companies has grown significantly in
- The ‘freedom with publicity’ regime which defined the regulatory approach
from 1870 to 1970 appeared to work and ran with the grain of the market.
- Arguments that are given today for prudential regulation of insurers tend
to be spurious or not well founded.
- Much government regulation of insurance companies is unlikely to achieve
its declared objective and might even encourage problematic behaviours
within insurance markets.
- Regulation to ensure good governance and good information flows to
markets may have some benefits and is less likely to cause the problems
that other forms of regulation create.
- A case can be made for regulation designed to promote the objective of
consumer protection. However, all the benefits of such regulation can be
achieved with far fewer costs by creating a voluntary system of government
regulation. Whether an insurance policy was written by a company which
was part of the government regulatory system should be very clear to
consumers at the point of sale.