The politics of insurance regulation and supervision reform in the European Union

In the late 2000s, the European Union (EU) undertook a significant reform of the framework for insurance regulation and supervision through the Solvency II directive, which substantially updated prudential rules and supervisory practices. This article addresses the question of what has driven the reform of the framework for insurance regulation and supervision in the EU. It is argued that the politics of the Solvency II directive was characterised by a strong alliance between the Commission and the United Kingdom, backed up by the large member states, some old member states and industry, particularly large companies and transnational groups. The United Kingdom was, however, the pace setter, whose influence was underpinned by the size of its insurance market; the expertise and effective coordination of national policymakers, and a state-of-the-art domestic regulatory model.