UK insurers push for seat at regulators' top table


* Regulators need insurance experts "at the very top" - ABI

* Banking industry like a "naughty child" - Hiscox CEO

By Myles Neligan

LONDON, Oct 11 (Reuters) - Britain's insurers wantregulators to appoint more senior figures with industryexpertise to correct what they see as an overwhelmingpreoccupation with the banking sector.

The pressure comes as Britain prepares to scrap itsfinancial services watchdog early next year and replace it withtwo new bodies: the Financial Conduct Authority (FCA) and thePrudential Regulation Authority (PRA), part of the Bank ofEngland.

"It is absolutely vital the PRA and the Bank of England havepeople at the very top who understand the insurance industrythey will be regulating," the Association of British Insurers(ABI) said on Thursday.

Insurers accuse regulators of focusing almost exclusively onthe banking sector since it sparked the global financial crisisin 2008, increasing the risk that rules designed for banks couldbe imposed across the entire financial services industry.

Some insurers say that the British government's neglect ofthe insurance sector is also reflected in its failure to have adecisive influence in talks over Europe's new Solvency IIcapital rules, which are expected to usher in more onerousrequirements for much of the industry.

"The naughty child is getting all the attention," saidBronek Masojada, chief executive of London-listed insurer andreinsurer Hiscox . "The bankers got it so wrong that thatis all anyone can think of at the moment."


Masojada said that the Bank of England should appoint adeputy governor responsible for non-bank finance firms so thatinsurers and fund managers have a voice in the new regulatorylandscape.

"The view of the insurance sector is that if theorganisation is run by a small number of people who are justcentral bankers and economists, then yet again it will bebanking uber alles," he said.

Insurers have been lobbying the government and regulators toimprove their understanding of the industry, and a group ofinsurance executives have outlined their concerns in a letter toFinance Minister George Osborne, industry sources said.

The Financial Services Authority denied that insurers werebeing overlooked.

"The FSA recognises the vital importance of the insuranceindustry and will continue to proactively engage with firms toensure they understand and are a major part of the regulatorychanges taking place," a spokesman said.

The PRA, tasked with making sure financial services firms donot run the risk of going insolvent, is due to publish detailsof how it will regulate insurers later this month.

Insurers worldwide are battling for an exemption from newrules being drawn up by regulators from the G20 group ofcountries aimed at preventing big financial institutions fromdestabilising the economy if they collapse.

The G20's regulatory task force has identified 48 biginsurers for potential inclusion alongside leading banks on alist of "systemic" financial institutions that could be forcedto hold extra capital.

(Editing by David Goodman)

((myles.neligan@thomsonreuters.com)(+44 207 542 13 73))