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Home > Prudential Regulation Authority > Solvency II news
 

Solvency II news


This page is for Solvency II implementation news and material of interest to firms and the UK insurance industry more widely.

November 2016

On 15 November the PRA withdrew Consultation Paper 37/16 ‘Solvency II: Reporting of National Specific Templates’. The decision was taken following insight that a number of firms plan to report in XBRL-enabled Excel format for financial year-end 2016. In respect of its decision, the PRA will issue two separate consultations:
 
i) a CP with the proposals for the reporting of National Specific Templates for financial year-end 2016 and future financial year-ends, using only Excel templates designed using XBRL principles, together with a number of reporting clarifications  and technical corrections. The reporting clarifications and technical corrections will be identical to those proposed in CP37/16; and
 
ii) in a later CP, proposals for the future reporting of National Specific Templates.
 
Further information, including why the PRA withdrew the CP and what happens next is available here.
 
Consequently, the Solvency II national specific and standard formula reporting templates briefing on Thursday 17 November 2016 has been cancelled. The PRA will be contacting those that had registered to attend, and apologises for any inconvenience.


On
Monday 14 November 2016, the PRA published CP39/16 'Cyber insurance underwriting risk' and a letter to firms.


On Monday 7 November 2016, the PRA published CP38/16 'Solvency II: group supervision'.

October 2016

On 25 October 2016, the PRA issued invitations to Solvency II firms, solution vendors and other industry stakeholders to a technical briefing on Thursday 17 November 2016. The focus will be on how to use the Solvency II national specific templates (NSTs) and standard formula (SF) templates for firm submissions and is aimed at individuals in firms and solution vendors responsible for the technical aspects of a firm’s reporting. More information, including how to register, is available on the PRA Solvency II national specific and standard formula templates briefing page.  UPDATE - this briefing was cancelled on 15 November 2016, see above.
 
On Tuesday 25 October 2016, the PRA published:

September 2016

On 21 September 2016, the PRA published three Solvency II policy publications:

David Rule, Executive Director, Insurance Supervision, also gave a speech 'Managing Risk in a Soft Market' at the General Insurance Research Organisation (GIRO) Conference 2016.

On Friday 9 September 2016 the PRA published:
 
The deadline for insurers to submit their Scope of Responsibilities (SoRs) is Wednesday 7 September 2016 as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. Insurance firms that have not submitted their SoR form by this date are reminded that SoR forms for Solvency II and non-Solvency II firms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website.
 
Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them. Small non-Solvency II firms are not required to submit SoRs to the PRA.

August 2016

On Wednesday 31 August 2016 the PRA reminded insurance firms of the Wednesday 7 September 2016 deadline for submitting their Scope of Responsibilities (SoRs) as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. SoR forms for Solvency II and non-Solvency II firms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website. For details on completing SoRs, firms are referred to the update issued on 7 July 2016.
 
Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them.
 
 
The deadline for Solvency II firms to submit their Scopes of Responsibilities (SoRs) is Wednesday 7 September 2016. The key requirements for insurers submitting their SoRs are highlighted below:
  • All Senior Insurance Management Functions (SIMFs) that grandfathered into the new regime on 7 March 2016 are required to provide to the PRA a completed SoR form by Wednesday 7 September 2016.
  • All current key function holders (KFHs) who are also in a Financial Conduct Authority (FCA) Controlled Function (CF), are expected to provide to the PRA a completed SoR by Wednesday 7 September 2016 if they haven't already done so.
  • All current KFHs, other than: i) 'notified non-executive directors (NEDs)' as defined in the PRA Rulebook; ii) PRA SIMFs; or iii) FCA CFs, are required to have provided a completed Form M to the PRA by Wednesday 7 September 2016.
  • Any notified NEDs who were appointed after 7 March 2016 should submit a Form M to the PRA as soon as reasonably practicable after the appointment of the NED.
  • No further information is required from notified NEDs who were already in post on 7 March 2016.
Please refer to the update below issued on 7 July 2016, which provides information and details on how firms should submit SoRs and other forms.

July 2016

On 28 July 2016 the PRA published an update to Supervisory Statement 4/14 'Capital extractions by run-off firms within the general insurance sector'.

On 18 July 2016 the PRA published a letter to general insurance firms from Chris Moulder, Director of General Insurance, with analysis and observations from regulatory returns and the monitoring the market questionnaire.

Analysis and observations from regulatory returns and monitoring the market questionnaire

On Thursday 7 July 2016 the PRA reminded insurance firms of the Wednesday 7 September 2016 deadline for submitting their Scope of Responsibilities (SoRs) as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. SoR forms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website. For details on completing SoRs, firms are referred to:
 
The SoRs will be looked at as part of a firm's supervisory cycle.
 
Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them.
 

On 6 July the PRA published 'Solvency II: Regulatory reporting and exemptions' - SS11/15 UPDATE and 'Solvency II: reporting and public disclosure - options provided to supervisory authorities' - SS40/15 UPDATE. The Bank also issued a survey to Category 4 and 5 insurers requesting feedback on the Bank of England Electronic Data Submission (BEEDs) portal.

June 2016

On 30 June the PRA published a presentation given to the London Market Actuaries Group on 26 May 2016, which may be of interest to general insurance firms. The slides collate information published by the PRA in a letter to firms on 4 December 2015 and CP19/16 ‘Solvency II: Changes to internal models used by UK insurance firms’. The presentation also contains updates from the PRA on other relevant areas for general insurers.

May 2016

On 25 May the PRA issued two publications of interest to Solvency II-affected firms:

  1. Solvency II: Monitoring model drift and standard formula SCR reporting for firms with an approved internal model - CP22/16. In this consultation paper the PRA proposes a draft supervisory statement setting out the PRA's approach to monitoring model drift and expectations on firms with an approved internal model to report the standard formula Solvency Capital Requirement (SCR). Responses to the proposals are requested by Wednesday 17 August 2016.
  2. Recalculation of the 'transitional measure on technical provisions' under Solvency II - SS6/16. This supervisory statement provides clarity with respect to the PRA's expectations, and proposed process, for recalculations of the transitional measure on technical provisions (TMTP) following Consultation Paper 15/16.
 
On 24 May the PRA updated its Stress testing page to reflect the launch of the European Insurance and Occupational Insurance Authority (EIOPA) 2016 insurance stress test package.
 

On 11 May the PRA set out the basis of the correct allocation to the lines of business, and in consequence some issues on the unbundling of contracts, that the PRA expects for reporting insurance contracts under employer’s liability insurance and motor insurance. The information in the note (see the Detailed technical information webpage – link below) is based on the Solvency II Directors’ update letter of 14 July 2015 (see link) on employer’s liability insurance and motor insurance which was issued to firms to enable their compliance with Solvency II by 1 January 2016. This note is relevant to all firms in scope of Solvency II and to the Society of Lloyd’s and relates to the Implementing Technical Standards on Supervisory Reporting.

Detailed technical information

Solvency II Director's letter, 14 July 2015

On 5 May, to support the PRA’s compliance with EIOPA initiatives and Directive requirements, the PRA issued a request to all Category 1 – 5 insurance firms to complete a short questionnaire in relation to External Credit Assessment Institutions (ECAIs) licences and reassessment of credit quality steps by 16 May 2016.

On 5 May the PRA published two consultation papers requesting feedback by 5 August:

  1. Solvency II: Changes to internal models used by UK insurance firms - CP19/16: the PRA proposes a draft supervisory statement setting out the PRA’s expectations on firms and the Society of Lloyd’s in relation to changes to internal models and extensions to the scope of internal models that have been approved under Solvency II.
  2. Solvency II: consolidation of Directors' letters - CP20/16: the PRA sets out its proposals for streamlining the presentation of the ways in which it expects firms to meet various requirements of Solvency II. The draft and updated supervisory statements appended to this CP set out the PRA's expectations of firms that were in formats including Solvency II Directors' letters, Executive Director's letters and feedback statements published in the period 1 April 2013 to 15 February 2016.

April 2016

On 25 April the PRA published a letter sent to the CEOs of those firms that participated in the General Insurance Stress Test 2015 with headline results and feedback.

On 7 April the PRA published Solvency II: Remuneration requirements - CP13/16 which seeks feedback on a draft supervisory statement with the PRA’s expectations for compliance with the key Solvency II remuneration requirements. The consultation closes on Thursday 2 June 2016.

March 2016

On 31 March the PRA published Equity release mortgages – Discussion Paper 1/16. The PRA asks for views on equity release mortgage (ERM) valuation, capital treatment, risk management and associated matters, and seeks a range of views on good practice for managing the risks introduced by investing in this asset class. While the DP is most relevant to life insurance and reinsurance companies with ERM exposure, it will also be of interest to other insurers, industry stakeholders (including, without limitation, banks, building societies, other lenders, trade bodies, brokers, credit rating agencies, consultants, actuaries and auditors) and academics. By opening the discussion to a range of stakeholders, the PRA is aiming to consolidate views from across sectors. The discussion process closes on Friday 27 May 2016.
 

On 11 March the PRA updated The PRA’s approach to insurance supervision to reflect, most significantly, the implementation of the Solvency II regime from 1 January 2016. The PRA’s approach to banking supervision was also updated.

On 7 March the PRA published a presentation from the Solvency II XBRL technical event held on 3 March 2016 for;  i) category 1-3 firms that have already submitted returns during the preparatory phase; ii) category 4 and 5 firms that will make their first submission in 2016; iii) solution vendors; and iv) other industry stakeholders.

The presentation includes a section that was delivered by the Business Reporting - Advisory Group, aimed at individuals in firms and solution vendors responsible for technical aspects of firms’ reporting.

PRA Solvency II XBRL technical event presentation 

February 2016 

On 24 February the PRA issued templates and instructions to all life and general insurance firms in scope of Solvency II that are subject to day 1 reporting to provide high quality data to supplement that reporting. The information gathered will be used by the PRA to monitor how firms have been implementing Solvency II, what benefit is being obtained from the various approvals, and to support PRA decision making and supervisory review. Firms should get in touch with their usual supervisory contact if they have any questions.

On 18 February the PRA published Solvency II: internal model reporting codes and components - SS37/15 UPDATE. The statement was updated to provide the additional flexibility when assigning codes to internal model Solvency Capital Requirement (SCR) components being reported (internal model SCR component codes remain a six character code).  The appendix has been updated to reflect additional flexibility in use of characters 4 and 5 of the code; these characters are now letters or numbers.
 
On 17 February Andrew Bulley, Director of Life Insurance at the PRA, gave a speech ‘The New Solvency II Landscape’  to the Investment and Life Assurance Group Limited (ILAG) Conference.
 
On 15 February the PRA updated its Stress testing page to reflect that European Insurance and Occupational Insurance Authority (EIOPA) had announced its plan to hold Europe-wide stress tests in 2016. 
 

Update 12 February - Before the end of February 2016, the PRA will be issuing templates and guidance and requesting all life and general insurance firms in scope of Solvency II that are subject to day 1 reporting to provide high quality data to supplement that reporting. Responses from firms will be requested by Friday 20 May. The information gathered will be used by the PRA to monitor how firms have been implementing Solvency II, what benefit is being obtained from the various approvals, and to support PRA decision making and supervisory review.

On 9 February the PRA issued three items of interest to Solvency II insurers.
 

1. A letter from the PRA’s Insurance Directors on ‘Longevity risk transfers’. This letter sets out the PRA’s views on the general issues arising from longevity risk transfers and clarifies the PRA’s expectations of UK insurers and reinsurers carrying out these transactions as either the buyer or the seller of longevity protection. 

 

2. ‘Solvency II internal model approval process data review findings’. This report completes and supersedes the Financial Services Authority’s ‘Solvency II: internal model approval process data review findings’ issued in September 2012. While the report is aimed primarily at firms that have received model approval and who are developing plans for future improvement or maintenance of the internal model, it will also help firms in the pre-approval process. 

 

3. ‘Directors’ certificates for 2015/2016 PRA regulatory returns from insurers’. Following discussions with insurers and audit firms, the PRA shares examples for the possible wording of directors’ certificates accompanying the final insurance regulatory returns for 2015 that will be filed under the new Solvency II regime. This note is aimed at being helpful to firms as IPRU(INS) Appendix 9.6 requiring a statement of ongoing compliance with parts of the PRA Rulebook was superseded with Solvency II requirements on 1 January 2016. 

 
January 2016
On 28 January the PRA issued invitations to a technical briefing on Solvency II XBRL on Thursday 3 March 2016. Invitations have been issued to; i) category 1-3 firms that have already submitted returns during the preparatory phase; ii) category 4 and 5 firms that will make their first submission in 2016; iii) solution vendors; and iv) other industry stakeholders.
 
The briefing will include presentations from Business Reporting - Advisory Group and is aimed at individuals in firms and solution vendors responsible for technical aspects of firms’ reporting submissions. Please send any queries about the briefing to PRAEventsManagement@bankofengland.co.uk.
 

On 15 January Sam Woods, Executive Director of Insurance Supervision, issued a letter ‘Reflections on the 2015 Solvency II internal model approval process’. The letter focuses on the use by the PRA of a ‘Quantitative Framework’ as one tool to assist with decision making in the internal model approval process. While the general philosophy set out in the letter has applied to all model reviews, the focus of the annex is on life issues. The letter also sets out the PRA’s views on the Solvency II Solvency Capital Requirement, whether it results from the use of an internal model or the standard formula.

 
 
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