At the mercy of politicians

Insurers' vulnerability to events outside their control highlights the importance of risk diversity in their businesses

Insurers received a sharp reminder recently of their vulnerability to political risk. Pension reforms flagged in the UK Budget on March 19 led to an immediate and, in some cases, precipitous drop in UK insurance company share prices when the chancellor of the exchequer, George Osborne, announced an end to compulsory annuitisation of defined contribution pension funds.

A planned review of closed books by the UK’s Financial Conduct Authority leaked a week later led to a second drop, although