Allianz urges UK action to boost insurance sector
Thursday June 23 2011 | 05:49 AM

Britain could lose more of its insurance business to Bermuda and Switzerland unless government and industry work out how to compete better globally, a senior industry executive said on Wednesday.

Clement Booth, chairman of Allianz's UK unit, said that in the past two or three decades no global insurance group had returned to make Britain its home again, and no new global group had developed here.

In the meantime, $65 billion has flowed into Bermuda's insurance sector to create an extra 10,000 jobs on the tiny island, Booth said.

"In the UK we should try to compete for a bit of that," Booth told an Association of British Insurers' conference.

"We need to reflect as a community ... on the capital that is flowing into Bermuda and Switzerland and even Ireland. I would argue that much of this could have ended up in the UK, and specifically in the City of London."

"It would be nice if political leadership were to be clearer that that should happen," said Booth, who is also a management board member of Allianz's head company.

Britain is home to the world's third-largest insurance sector, with assets totalling 1.8 trillion pounds, the sector regulator said this week.

Booth said insurers and reinsurers look for three things; statistical data to price risk, stable long-term legal and tax rules, and the ability to determine premiums without undue regulatory interference.

"You can tick most of these boxes in the UK context, but there is a global competition for capital out there in the insurance world.

Mark Hoban, Britain's financial services ministers, replied there was a need to make sure the UK tax regime was generally competitive, and reforms were already underway.

Corporation tax was being cut, making it the most competitive in the advanced economies, while life insurance tax was also being examined, Hoban said.

Taxation of insurance branches was also being reformed to help the insurance sector take advantage of new European Union insurance rules known as Solvency II, Hoban added.