In 2017, the record $ billion of insured losses were eclipsed by an additional $ billion of uninsured ones.11 In some of the countries most exposed to climate change - Bangladesh, India, Vietnam, Philippines, Indonesia, Egypt and Nigeria - insurance penetration is under 1%.12 The potential economic benefits of closing the insurance gap are striking. Lloyd’s of London estimates that a 1% rise in insurance penetration can translate to a 13% reduction in uninsured losses and over 20% reduction in disaster recover burden on taxpayers. Substantial macroeconomic benefits include increased investment, higher output (potentially up to 2% of GDP) and greater climate resilience.13 Despite this prize, progress is proving stubbornly slow – over the past 30 years the gap has narrowed by only from 78% to 70% globally, underscoring the importance of the IDF’s work.14 The role of insurance for adaptation and resilience So what should be done? 10  Munich Re (2019), The natural disasters of 2018 in figures, See: https://www.munichre.com/topics-online/en/climate-change-and-naturaldisasters/natural-disasters/the-natural-disasters-of-2018-in-figures.html. 11 Swiss Re institute (2018). See: https://www.swissre.com/institute/research/sigma-research/sigma-2018-05.html. 12 See Lloyd’s of London global underinsurance report (2018). Available online at: https://www.lloyds.com/~/media/files/news-and-insight/riskinsight/2018/underinsurance/lloyds_underinsurance-report_final.pdf. 13 Lloyd’s City Risk Index, 2015-2025 (2015), available at: https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/risk/downloads/crslloydscityriskindex-execsummary.pdf. 14 Geneva Association, Understanding and Addressing Global Insurance Protection Gaps (2018). See: https://www.genevaassociation.org/sites/default/files/research-topics-documenttype/pdf_public/understanding_and_addressing_global_insurance_protection_gaps.pdf. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Both sides of insurers’ balance sheets need to respond. On the liability side, the focus must be reducing the protection gap and supporting the resilience of households and companies to growing climate risks.

We are now working out the details for both schemes, and we look forward to further consultations with HKAB and other bodies as the proposals progress. The theme of the reform programme is facilitating greater competition in the banking sector while strengthening safety and soundness. Perhaps the single most important measure to remove barriers to competition will be the abolition early next month of the last remaining Interest Rate Rules, which involves removing the interest rate cap on savings accounts and ending the prohibition on interest on current accounts. There is, of course, much speculation about the immediate impact of this event: whether it will be a big bang that will change the face of banking services, or merely a quiet change of gear. Given the plentiful liquidity in the banking system, it is likely that it will be the latter. But there should be no doubt about its significance in bringing to an end restrictions that have been in existence for more than a third of a century. The restrictions, some of you may recall, were introduced in 1964 as a measure to prevent cut-throat competition among banks. They served their purpose, but they have now outlived their usefulness. Why do we place so much stress on facilitating competition through regulatory reform? I use the term “facilitate” because it is not within the power of a government – and it is certainly not the policy of our government – to create competition, or to force competition to happen.