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Mark Carney warns insurers 'not too big to fail'
BoE Governor warns top insurance executives will be held to account for the risks they take
Mark Carney, the Bank of England Governor, said: "What the Bank of England won’t do is protect insurance companies from the consequences of their own decisions." Photo: Reuters
By Martin Strydom
7:34AM BST 22 May 2014
8 Comments
Mark Carney, the Governor of the Bank of England, has warned British insurance companies they are not too big to fail and said that, like bankers, top insurance executives would be "accountable for their actions if things go wrong".
"If we think that managements’ actions today pose a risk tomorrow, we won’t hesitate to step in," he said, as he cautioned insurers to be wary when considering riskier, "less traditional investments".
Britain's insurance industry is a major part of the UK financial services sector. It is home to the third-largest insurance market in the world, which contributes £25bn to the economy, provides jobs for 300,000, manages around £2 trillion of savings and earn a third of its income abroad.
Some traditional insurance business has become "less viable" after the Bank of England was forced to keep interest rates low to underpin the economy following the 2008 financial crisis, according to Mr Carney writing in The Times,
This search for higher returns was not necessarily a problem, he said but warned: "What the Bank of England won’t do is protect insurance companies from the consequences of their own decisions."
BoE Governor warns top insurance executives will be held to account for the risks they take
Mark Carney, the Bank of England Governor, said: "What the Bank of England won’t do is protect insurance companies from the consequences of their own decisions." Photo: ReutersBy Martin Strydom
7:34AM BST 22 May 2014
8 Comments Mark Carney, the Governor of the Bank of England, has warned British insurance companies they are not too big to fail and said that, like bankers, top insurance executives would be "accountable for their actions if things go wrong".
"If we think that managements’ actions today pose a risk tomorrow, we won’t hesitate to step in," he said, as he cautioned insurers to be wary when considering riskier, "less traditional investments".
Britain's insurance industry is a major part of the UK financial services sector. It is home to the third-largest insurance market in the world, which contributes £25bn to the economy, provides jobs for 300,000, manages around £2 trillion of savings and earn a third of its income abroad.
Some traditional insurance business has become "less viable" after the Bank of England was forced to keep interest rates low to underpin the economy following the 2008 financial crisis, according to Mr Carney writing in The Times,
This search for higher returns was not necessarily a problem, he said but warned: "What the Bank of England won’t do is protect insurance companies from the consequences of their own decisions."
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