This consultation paper (CP) follows on from CP16/14, and sets out some further proposed changes to the PRA’s rules to implement the ‘fit and proper’ requirement provisions of the Solvency II Directive, and to introduce a new Senior Insurance Managers Regime (SIMR). These proposed rules, along with the expectations set out in some draft supervisory statements, will set out the regulatory framework to ensure that those individuals who run insurers have clearly defined responsibilities and behave with integrity, honesty and skill.
This CP is of primary interest to all insurance and reinsurance firms, including third country branch undertakings, within the scope of Solvency II, and to the Society of Lloyd’s and managing agents; and may also be of interest to consumers.
Summary of the proposals covered by the CP
This CP sets out the PRA’s proposals in relation to the:
- scope of the PRA’s proposed new SIMR for insurers;
- allocation of responsibilities to senior insurance managers;
- application of conduct standards to individuals performing key functions; and
- assessment of fitness and propriety of those individuals.
It should be noted that the SIMR for insurers will reflect the particularities of insurers’ business models and the relevant legislation, and will not be the same as the Senior Managers Regime (SMR) that was proposed for banks in CP14/14.
A related CP from the FCA, to be read in conjunction with this CP, is also available (see external links).
The PRA expects to publish further consultation material on the role of NEDs in the SIMR in early 2015, taking into account the context of both the insurance and banking regimes.
The PRA is required to transpose the Directive by Tuesday 31 March 2015, and the first tranche of rules needed to ensure that there is an operationally effective regime that will enable Solvency II implementation on 1 January 2016 will be commenced from that date.
The PRA will set out its planned timetable later this year for the implementation of the remaining rules that are proposed in this CP.
This consultation closed on Monday 2 February 2015.