* Could force insurers to hire advisers to check reserve levels * “Deep concern” about sexual harassment, bullying at Lloyd’s By Huw Jones and Carolyn Cohn LONDON, Nov 5 (Reuters) – The Bank of England warned on Tuesday it will crack down on insurers that are overly optimistic about how much capital they need to cover growing risks from the United States and elsewhere. Gareth Truran, acting director for insurance supervision at the Bank’s Prudential Regulation Authority, said the risk of reserving “deficiencies” was increasing in a sector that may be “optimistic” about its outlook. He singled out specialty classes offered by Lloyd’s of London and other London insurance firms. The PRA sees “increasing areas of emerging risk particularly in some U.S. casualty lines such as financial and professional lines, medical malpractice and general liability classes,” Truran said in a letter to CEOs of insurers he regulates. “For Lloyd’s managing agents, we will continue to work closely with Lloyd’s, taking into account in particular the work of Lloyd’s Performance Management Directorate in approving and monitoring syndicate business plans,” Truran said. Lloyd’s last year told its members to ditch the worst performing 10% of their business, and that performance management programme is continuing for 2020. Syndicates have as a result pulled out of insurance classes such as professional and indemnity, and marine and aviation. Liability insurers focused on the United States, where Lloyd’s gets a large chunk of its business, are also worried about the cost of legal settlements from an opioid epidemic. Lloyd’s syndicate Hiscox said on Monday it was strengthening reserves in directors’ and officers’ liability insurance underwritten by its U.S. unit. Truran said the PRA could order “section 166” reviews, forcing an insurer to hire external advisors to check on the adequacy of reserving levels. Supervision will look beyond capital to culture given the PRA’s “deep concern” over reports on sexual harassment and bullying within the London insurance market, Truran said. It raised questions about whether insurers have a culture that allows people to “speak out”. Nearly one in 12 employees working in the Lloyd’s of London insurance market has witnessed sexual harassment there in the past year and a quarter of them have witnessed excessive drinking, according to survey published by Lloyd’s in September. The PRA will work closely with the Financial Conduct Authority to assess instances where inappropriate culture and behaviour within firms may impact compliance with regulatory expectations.