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UK Gov targets London ILS framework for early 2017


The UK government is targeting the release of a draft regulatory framework for insurance-linked securities (ILS) in autumn 2016, with the aim to have the framework implemented in early 2017 and said that the ILS work remains a government priority.

The UK has been seeking to establish London as a market able to issue and offer ILS products alongside its traditional insurance and reinsurance offerings, and has been working to develop a regulatory framework to support this.

The regulation had originally been hoped to be completed in 2016, but delays have occurred (the UK government has been a little busy this year) meaning that the target date has slipped, but the goal has not.

The work to create legislation to enable the UK to become a home for the issuance of insurance-linked securities (ILS), such as catastrophe bonds, collateralised reinsurance transformers and other ILS vehicles, has been ongoing for around 18 months now.

The Economic Secretary to HM Treasury Simon Kirby wrote to London Market Group Chairman Nicolas Aubert last week, to thank the LMG and the ILS Taskforce for its work to date and saying that “we now need to move to the next phase of the project.”

Kirby also explained what the LMG can expect from the government, in terms of timeframes that it might be able to get the ILS related legislation through Parliament and ratified for use. The important step that could enable London’s insurance and reinsurance market to also become a hub for ILS business.

“I plan to issue draft regulations for consultation later this Autumn,” Kirby wrote to Aubert, “with a view to placing final regulations before Parliament early next year.

“I hope that the ILS Taskforce will continue to play a central role in developing these regulations.”

It’s clear that the UK government is focused on ILS as a key strategy goal for the future of its insurance and reinsurance market, recognising that ILS is a development that the UK needs to get up to speed with or risk losing business to other ILS-ready domiciles.

“The insurance-linked securities (ILS) project aims to provide London with the framework it needs to remain a world leader in reinsurance,” Kirby explained.

As a result the ILS work is a priority for the UK government, as it seeks to modernise and secure its financial market future.

“The ILS project remains a priority for the Treasury,” Kirby wrote, “I look forward to working with you [the LMG] and London market colleagues to ensure successful implementation of the UK’s new ILS framework in early 2017.”

Read some of our other recent coverage of London’s journey to become an ILS hub:

UK ILS legislation can help London market support resilience: LMG CEO.

ILS business could transact in London from January 2017 – LMG’s Newman.

Efficient ILS structure will help secure London’s future: Beale, Lloyd’s.

LMG welcomes start of UK gov’s ILS legislative process.

UK drafts beginnings of ILS framework, starts with transformers.

London LMG looks to innovate on equal reinsurance credit for ILS.

Attracting ILS & cat bonds will be challenging for London: Report.

London re/insurance market needs true innovation: DAC Beachcroft.

Collateralised reinsurance focus for London (LMG) ILS task force.

London has to fight its corner on ILS: Michael Wade, Cabinet Office.

London ILS task force participants revealed, holds first meeting.

LMG sets up London cat bond & ILS group, a chance to think bigger.

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