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Home > Prudential Regulation Authority > Dealing with a market turning event in the general insurance sector - CP32/16

Dealing with a market turning event in the general insurance sector - CP32/16

21 September 2016

​In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out a draft supervisory statement on its expectations of general insurance firms regulated by the PRA, in relation to significant general insurance loss events which might affect firms’ solvency and future business plans.

This CP is relevant to all PRA-regulated general insurance firms in scope of the Solvency II Directive (the Directive), and to the Society of Lloyd’s and managing agents (‘Solvency II firms’). The SS sets out the PRA’s expectations of how such firms, particularly those operating in the global specialty insurance and reinsurance market known as the London market, might plan for and respond to such an event.

At the time of writing, the PRA also issued Supervisory Statement 12/16 ‘Solvency II: Changes to internal models used by UK insurance firms’ – see Related Links. Firms with internal models may find it helpful to refer to the SS to consider the PRA’s expectations on firms applying for approval for a major change.

Summary of proposals

The draft SS sets out the PRA’s expectations of firms in planning for and in the event of a Market Turning Event (‘MTE’). It is particularly focused on those firms that breach or may breach their SCR or MCR within the three months following an MTE.

The draft SS also outlines some areas that the PRA would expect firms to consider in the medium and long-term after an event, to assess the lessons which might be learned from the experience and to assess the potential consequences for their business model and risk profile.

Responses and next steps

Update 22 December 2016: The consultation period has been extended to Monday 9 January 2017 and is now closed. A technical issue was identified which affected respondents' ability to email submissions. This was resolved on Monday 19 December, and the PRA invites comments and enquiries on the proposals set out in this consultation to

Consultation paper