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Home > Prudential Regulation Authority > Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – PS11/17
 

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – PS11/17

28 April 2017

Overview

This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback on responses to Consultation Paper (CP) 47/16 ‘Maintenance of the ‘transitional measure on technical provisions’ under Solvency II’. The PS also contains an updated Supervisory Statement (SS) 6/16.

This PS sets out final policy intended to clarify the PRA’s expectations for maintaining the calculation of the transitional measure on technical provisions (‘TMTP’) both at outset and over the transitional period.

This statement is relevant to all UK insurance firms within the scope of Solvency II and to the Society of Lloyd’s. It is particularly relevant to firms that have been granted approval to use the TMTP, or those considering applying to use this transitional measure.

In CP47/16, the PRA proposed amending SS6/16 ‘Recalculation of the ‘transitional measure on technical provisions’ under Solvency II’ to include the PRA’s expectations:

  • that changes in best estimate assumptions used to calculate Solvency II technical provisions should, where applicable, be reflected consistently in the Solvency I Pillar 1 and Pillar 2 bases;
  • that firms should analyse the material components and drivers of the TMTP benefit to facilitate better risk management; and
  • on the role of firms’ audit committees in ensuring that the TMTP claimed continues to meet the conditions for approval.

Feedback on consultation responses

The PRA has made changes to the draft SS6/16 after considering responses to the consultation and further analysis. Details of the changes are included in Chapters 2 and 3 respectively. The PRA does not consider the impact of the changes to be significant.

Policy statement

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – PS11/17

Appendix

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II –SS6/16 UPDATE


 
 
 
 
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