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BOE Warns Insurers to Stop Cutting Prices to Win Business

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The London insurance market shouldn’t keep cutting rates to secure business because it may not be adequately pricing the risk it is taking on, the Bank of England said.

The key challenge for the industry, which has endured 10 years of falling prices, is to avoid “the winner’s curse of underpricing,” David Rule, the Prudential Regulation Authority’s new executive director of insurance supervision, said in a speech in Dublin. “The PRA is a not a price regulator, but we are concerned to see that firms are adequately managing their exposures.”