Support vs intervention

The relationship between the UK insurance industry and the government has received a lot of attention recently. On the general insurance side there is the changing regulatory environment and the debate around government support for the industry in the event of extraordinary losses as a result of floods or an act of terrorism. On the life side there are the ramifications of Equitable Life. In her speech to the Association of British Insurers annual dinner last week, Ruth Kelly , economic secretary to the Treasury, emphasised the importance of an effectively functioning insurance industry which enables individuals to save sufficiently for their old age, which allocates investment efficiently, and provides a structural solution to the problem of risk. In this edited extract, Ms Kelly outlines the government’s interest in, and relationship to, the industry.