This page is for Solvency II implementation news and material of interest to firms and the UK insurance industry more widely.
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 submit their SoRs to their usual supervisory contact by Wednesday 7 September 2016.
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.
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.
On 25 May the PRA issued two publications of interest to Solvency II-affected firms:
- 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.
- 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:
Solvency II: consolidation of Directors' letters - CP20/16
: the PRA sets out its proposals for streamlining the presentation of thw 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.
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.
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