At the Insurance Investor Live forum in London, a representative from Aviva, Albici, expressed concerns about the current state of the UK insurance industry. Albici, who is responsible for private asset origination for Aviva’s annuity business, stated that the Prudential Regulation Authority (PRA) had initially aimed to make UK insurers more competitive and encourage investment in real assets that contribute to economic growth. However, he noted that the industry has actually moved in the opposite direction.
The PRA’s intentions were to create a more favorable environment for insurers to invest in assets such as infrastructure, real estate, and private equity, which can provide long-term returns and support economic growth. However, despite these efforts, the industry has not responded as expected. Instead of increasing investment in these areas, insurers have become more cautious and risk-averse, opting for more traditional and lower-yielding investments.
Albici’s comments suggest that the PRA’s efforts to stimulate investment in real assets have been unsuccessful, and the industry is not taking advantage of the opportunities available. This is concerning, as investment in real assets can have a positive impact on the economy, creating jobs and driving growth. The lack of investment in these areas may be hindering the UK’s economic recovery and limiting the potential for long-term growth.
The reasons for this trend are not entirely clear, but it is possible that insurers are being driven by short-term considerations, such as meeting regulatory requirements and managing risk, rather than taking a longer-term view and investing in assets that may provide higher returns over time. Additionally, the current low-interest-rate environment may be making it more challenging for insurers to generate returns from traditional investments, leading them to become even more risk-averse.
Overall, Albici’s comments highlight the need for the insurance industry to re-examine its investment strategies and consider the potential benefits of investing in real assets. By doing so, insurers can not only generate returns for their policyholders but also contribute to the broader economic growth and development of the UK. The PRA’s efforts to encourage investment in real assets are well-intentioned, but it is up to the industry to respond and take advantage of these opportunities.