PRA WARNS INSURERS AGAINST UNDERPRICING

The UK’s insurance regulator, the Prudential Regulation Authority, has warned insurers and reinsurers of the need to remain disciplined on price, given competitive market conditions. In a letter to CEOs, the PRA’s Executive Director for Insurance, David Rule, expressed concerns that some companies may be taking on more risk than they realise. “In aggregate, premium rates reduced, but overall premium adequacy, as estimated by firms, is marginally higher. While we recognise that not all business can be subject to robust technical price, this observation does raise the question whether some firms are taking an overly optimistic view of current pricing,” he wrote.