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Home > Prudential Regulation Authority > Solvency II: Supervisory approval for the volatility adjustment – CP22/17

Solvency II: Supervisory approval for the volatility adjustment – CP22/17

03 November 2017


This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA’s) proposals to clarify its expectations in respect of firms seeking approval to apply a volatility adjustment (VA) to insurance and reinsurance business.

This CP is relevant to insurance and reinsurance companies using or intending to use the VA.

Summary of proposals

The proposals clarify the risks that may arise from use of the VA and how firms are expected to consider those risks. The PRA proposes to update Supervisory Statement (SS) 23/15 ‘Solvency II: supervisory approval for the volatility adjustment’.

In the course of reviewing firms’ VA applications the PRA has identified particular areas of prudential risk that may arise from using the VA, and which have had to be addressed in the review process. This CP aims to alert all firms considering applications to use the VA to those risks, and to help them to produce high-quality applications that successfully address those risks.

Responses and next steps

This consultation closes on Friday 9 February 2018. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to

Consultation paper