Regulation and legislation continue to be major transformational factors for insurers.

EU’s Solvency II regime

The implementation of the EU’s [Solvency II] regime is now likely to be delayed until January 2014 at the earliest, with the FSA running its triennial adequacy test in advance of Solvency II implementation. Although some uncertainties remain, debate continues in Europe and we are heavily engaged to help to secure recognition that countercyclical dampeners should form a part of the final package. However, the impact of Solvency II is still likely to mean that the cost of providing financial products for consumers will increase.

EU’s Gender Directive

The implementation of the European Court of Justice’s judgment, which requires gender neutral pricing, is also expected to take place on 21 December 2012 and will lead to significant price changes for motor insurance, life insurance and to a lesser extent, annuities.

Retail Distribution Review (RDR)

RDR is scheduled to be implemented from January 2013. The movement from commission to adviser charging, which will often involve end customers paying fees rather commissions on sales of savings products, is likely to have a profound effect on the market. Taken together with the introduction of higher professional qualifications, it may well mean a reduction in the number of IFAs, many of whom may choose to focus only on affluent consumers. Some banks have also moved away from giving advice on investments to mass affluent customers.

This should mean that there will be greater opportunities to offer products through non-advised distribution, including online. Greater direct engagement with customers by product providers is likely to be required. The changes will also mean that fewer retail customers and employers may be prepared to pay a fee to switch providers, leading to higher persistency on savings products.

(Download XLS:) Download Excel





We broadly supported the principle of a flat rate pension for all as we believe the clarity this would give individuals would encourage increased engagement in retirement planning.

Average size of pension fund used to buy an annuity in 2010.
ABI figures 2011.


We were closely involved in the Government’s review of auto enrolment and are encouraged by the increased coverage of workplace pensions this will deliver.


We believe that change is needed in this area and that any settlement must be clear. People need to understand what the State will provide and what their own responsibilities are.

£26,000 per year
Current average long-term care bill.
From “Who cares? The implications of a new partnership to fund long-term care CII, September 2011”.


The Dilnot Commission’s recommendations for a partnership model have the potential to deliver this through an extended means-test and a cap on care costs.


We believe it would be possible to develop a simple products brand. Success in reaching the consumer, however, will depend on education, on tapping into life-events and existing distribution channels, and on clear and simple communication without the complications and costs which arise from excessive and unpredictable regulation.

Percentage of UK adults with life cover.
Mintel, July 2011.


Many simple products already exist, such as ISAs and term assurance, and we feel that distribution channels and mechanisms are in many ways more important than the development of the underlying products.


Share this page.