And international co-operation is essential in addressing risks and problems that do not fit neatly inside national borders, doubly true for insurers given the global nature of many of the risks you cover and global structure of many insurance companies. Just as ensuring robust prudential standards at UK level is an important aspect of UK competitiveness, robust prudential standards at international level will contribute towards global competition. Climate Change  Healthy competition can also help accelerate developments in new and little explored areas of risk. Understanding of climate change risk in the financial sector has expanded significantly over the last few years – and international collaboration is key to enable those organisations that are further ahead to encourage others to make similar, or perhaps even bigger, strides. I’m delighted to have been recently appointed as Chair of the Sustainable Insurance Forum (SIF). SIF serves as the platform for insurance supervisors and regulators looking to address sustainability issues, enabling collaboration, sharing of knowledge and identification of best practices. Coordination at the international level – through platforms like the SIF and also the Network for Greening the Financial System (NGFS) – enables the development of consistent standards that can be implemented globally. Just as importantly, collective action also reduces the risk of individual states undercutting on standards to gain a competitive edge – international consensus as a means of addressing collective action problems. I’m very pleased that the ABI has chosen to focus on climate risk as one of the themes of today’s event.

My colleague David Bailey, the Executive Director for International Bank Supervision, spoke in January about the PRA’s approach to hosting international Banks in his speech in January on “responsible openness”, and the same principles apply in insurance.4 We have always attracted international insurers looking to establish operations in the UK to take advantage of concentration of skills, proximity of fellow insurers, and strong legal and regulatory systems. There have always been processes and rules in place to ensure that these entities are authorised and supervised appropriately. However, the end of passporting 1  Information on the Temporary Permissions Regime London Market Group report ‘London Matters 2020’ 3 Association of British Insurers ‘The State of the Market 2019’ 4 David Bailey Speech: ‘Responsible Openness’ 2  3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  access from the EU has removed a route into the UK market for a huge number of insurers. To give some sense of scale, over 600 EU insurers held passporting permissions to write business in the UK in December 2020 (although not all passports were actually in use). Although only a third of those firms chose to enter the TPR, even this relatively more manageable number – 190, from 20 countries – represents a step change in the size and number of overseas insurers the PRA has responsibility for, with many of these insurers expected to apply for permanent authorisation. It is therefore only right to consider in detail our approach to these firms.