Yesterday afternoon Peers completed their debates on the Bill. Almost all of the short discussion (of just around 40 minutes or so) focused on the part 2 of the legislation, ie the discount rate provisions.
The Government accepted two amendments on the timing of rate reviews, meaning that as things stand now (and subject to any further amendments in the Commons):
(i) the initial review of the discount rate will start within 90 days of Royal Assent to the Bill (the need for a specific commencement order has been dropped), and
(ii) subsequent reviews will be on a cycle of five rather than three years which, as Justice Minister Lord Keen put it yesterday “could help reduce the effect of the litigation practice of trying to game the system”.
This first new amendment, along with the earlier shortening of the window for the first review of the rate from 180 to 140 days, serves further to signal the Government’s intention to proceed as promptly as it can in re-setting the discount rate once these new powers are enacted. The new rate being set in some time in mid to late 2019 continues to look like a realistic prospect.
More generally, Lord Keen very clearly reiterated the Government’s intention to amend the Bill in the Commons in order to introduce a regulatory requirement for insurers to report on savings generated by the reforms in the legislation. It is not yet clear if the Bill will be introduced in the Commons before the summer break.
Authored by Alistair Kinley, Director of Policy & Regulatory Affairs