Market News

LONDON (Reuters) -Britain's Prudential Regulation Authority (PRA) is proposing changes to help insurers accelerate investment in the country, responding to the government's call to cut red tape in favour of economic growth.

Finance minister Rachel Reeves, whose pre-election promise of driving faster economic growth is looking increasingly challenged, has been urging regulators to develop policies which boost investment in the country.

The PRA, which is part of the Bank of England, said on Tuesday that reforming its matching adjustment application process to allow firms to invest while waiting for receipt of full permission would boost their competitiveness and help the economy.

"This innovation will enable insurers to make more rapid investment decisions and support growth in the UK economy, while protecting policyholders," PRA Chief Executive Sam Woods said in a statement.

The measure could free up billions of pounds of capital to invest in British infrastructure and help boost the country's sluggish economy, an attractive option for the government at a time when businesses face new headwinds from tariffs.

The so-called matching adjustment for insurance firms seeks to ensure that assets held by them generate enough cash to cover future payouts on policies and pensions.

Investing in an asset that generates cash at the right time allows insurers to cut back on capital requirements, subject to a discount.

(Reporting by Sachin Ravikumar, writing by Sarah Young)