A planned regulatory change affecting overseas insurance branches in the London Market has been dropped after concerns were raised by the International Underwriting Association, in a move welcomed by the industry as preserving a proportionate supervisory regime.

The Prudential Regulation Authority had proposed reforms to its Modification by Consent process, which allows firms to benefit from adjustments to regulatory reporting requirements, and is intended to reduce administrative burden for smaller branches.

Under the plan, larger international insurance groups operating UK branches would have been required to adopt full reporting standards, increasing the volume and complexity of regulatory submissions.

The IUA questioned the cost/benefit case for the reforms, warning that the changes could be more costly than expected, and would create significant operational pressures for affected firms. It highlighted the need for substantial information technology upgrades to collect, process and submit additional reporting templates.

Following further analysis, the PRA concluded that “quarterly reporting from larger branches delivers limited additional supervisory value relative to the costs that would be incurred”.

Nafisah Hussain, director of public policy at the IUA, said: “I am delighted that the PRA has taken on board our comments and agreed not to unnecessarily increase the reporting burden for our members. This move clearly demonstrates the value of an effective consultation process and the importance of regulators and industry working together to develop a robust but proportionate and efficient supervisory regime.

“In addition to promoting the safety and soundness of the firms it regulates, the PRA also has a statutory objective to enhance competitiveness and growth. This decision will help ensure that the London Market remains an attractive location for international insurers.”

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