The Bank of England’s Prudential Regulation Authority (PRA) has suggested reforms to the insurance market to drive more “productive, long-term investments” in the UK economy.

The move would cover changes to Matching Adjustment (MA) regulations relating to greater investment flexibility, revised eligibility rules, and more flexibility in MA processes.

The PRA also said that the reforms would improve risk management, provide a greater role for senior manager responsibility including through attestations, and involve certain amendments to MA calculation and reporting.

The regulator added that they would improve investment flexibility for insurers by allowing broader and quicker investments by companies in their MA investment portfolio.

It says that the reforms, working with upcoming legislation, will facilitate greater investment freedom by insurers to increase their investments in productive finance from 2024 onwards.

The proposals come after wider reforms were announced by the government towards the end of last year.

‘We propose to adjust regulations to reflect the decisions made by the government about the level of financial resilience that should be required of insurance companies,” said Sam Woods, deputy governor for prudential regulation, The Prudential Regulation Authority (PRA). “These proposals aim to promote policyholder protection while enabling the annuity sector to meet its commitments to the Government to increase investment in the UK economy."

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