Two of Britain’s biggest insurers have said ripping up the EU rule book when it comes to investment will release £80bn between them for tech.

This freed-up money could be used for green net-zero technology investments and the Government’s “levelling up” agenda, the bosses of Legal & General and Phoenix Group have said.

City minister John Glen reiterated last night that the EU’s Solvency II rules would be reformed to cut red tape. The Government hopes that the reforms will make it easier for insurance companies to free up capital to make investments in long-term projects, such as green energy schemes. Prime Minister Boris Johnson has called for an “investment Big Bang”.

Mr Glen told the Association of British Insurers’ annual dinner that overhauling Solvency II rules represented a “genuine opportunity” to encourage the sector’s growth and that EU regulation “doesn’t work for us anymore”.

The Government’s plans have been drawn up in conjunction with the Bank of England and a consultation document on Solvency II changes will be published in April.

Bank of England governor Andrew Bailey has said that “the case for reform is clear” and that through a revamp “we can look to enable more support from insurers for productive finance and infrastructure investment”.

Sir Nigel Wilson, chief executive of Legal & General, welcomed the planned reform. “When implemented it will enable Legal & General to invest billions more in the UK’s levelling up, net zero and science super power agenda,” he told the Financial Times.

Andy Briggs, chief executive of Phoenix Group, said his group could potentially invest up to £50bn in illiquid and sustainable investments in the UK, to support and accelerate the decarbonisation and levelling up agendas.

Although the Government is presenting reform of Solvency II as a win for Brexit, Brussels is already running a parallel reform, and indeed is further ahead than the UK, proposing changes last year it said would release up to €90bn in short-term capital for the bloc’s insurers – prompting sceptics to point out that what the Government is doing would have happened anyway if Britain had stayed in the EU.

The Solvency II rules came into force in 2016 and govern how insurance companies make investments. They have come in for criticism for being overly bureaucratic and are considered by some in the City as an easy candidate for a post-Brexit overhaul.

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