This consultation paper seeks feedback on draft rules that set out how the Prudential Regulation Authority (PRA) intends to apply the Senior Insurance Managers Regime (SIMR) in a streamlined manner to firms outside of the scope of Solvency II.
Those who run regulated firms should have clearly defined responsibilities and behave with integrity, honesty, and skill. The SIMR is being introduced by the PRA to facilitate this. On 23 March, the PRA set out final rules, following consultation, in respect of how the SIMR will apply to Solvency II firms.
The streamlined SIMR will apply to insurance firms that are not Solvency II firms. It will also apply on a transitional basis to run-off firms, so long as these firms are not subject to the Solvency II rules in accordance with Transitional Measures 2 in the Solvency II Firms section of the PRA Rulebook. Collectively, the firms to which the streamlined SIMR will apply are described as ‘non-Directive firms’ or ‘NDFs’.
Summary of proposals
NDFs pose different risks to the PRA’s objectives compared with Solvency II firms. For example, almost all of these firms have assets of less than £25 million and annual premium income of less than £5 million. Accordingly, many features of the SIMR have been streamlined to take a more proportionate approach to the way the regime would apply to NDFs.
The draft rules set out proposals for:
- how the current list of possible controlled functions would be simplified to a single small insurer senior management function (SISMF);
- how the fitness and propriety of those individuals running NDFs will be assessed;
- and how conduct standards would be applied to the senior managers of NDFs.
This consultation closed on Friday 15 May 2015. Please address any comments or enquiries to CP12_15@bankofengland.co.uk.
The PRA will consider the feedback received and will publish the final rules at a later date.
Senior Insurance Managers Regime: a streamlined approach for non-Solvency II firms – CP12/15
Firms should note that the Financial Conduct Authority (FCA) is consulting separately on proposed amendments to its Approved Persons Regime for NDFs.