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Striking a negative note at the Association of British Insurers’ Solvency II conference, at which delegates laid bare their anxieties over Solvency II, Carl Dowthwaite expressed concerns about the unintended consequences of EU regulation on providers’ ability to be creative with annuity products.
Mr Dowthwaite, who said he had examined the latest version of the European Union’s insurance regulation directive, said the proposals were an improvement on level-one standards but could leave the annuity market “restricted” in terms of introducing evolutionary new products.
Mr Dowthwaite said Legal & General had previously expressed concern about limited capital being available and the effect that this could have on restricting the market for consumers.
Fellow panel member Jim Rasque, policy adviser for prudential regulation at Insurance Europe, acknowledged this potential problem. He said it had been difficult to find a compromise “when every market needs a different solution”, adding that some of the latest proposals could have an effect on the availability of investment products.
Sajid Javid MP, financial secretary to thre Treasury, said: “I am happy with the compromises that have been reached and hope this will finally be the moment to move things forward successfully". He applauded the UK for its efforts to protect its interests and customers and said he is confident that Solvency II can work effectively.