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Home > Prudential Regulation Authority > Prudential regulation of insurance companies

Prudential regulation of insurance companies

​The PRA is responsible for the prudential regulation of insurance companies. The PRA promotes the safety and soundness of insurers and contributes to ensuring the appropriate degree of policyholder protection by ensuring continuity of cover so that valid claims are paid when they become due.

The PRA was created by the Financial Services Act (2012) and is part of the Bank of England. The Bank set out how it intends to regulate insurers in the 2014 PRA approach documents.

Frequently Asked Questions on insurance regulation



How does the PRA regulate insurers?
The UK insurance industry is the third largest in the world and the largest in Europe. The PRA regulates all insurance business in the UK. That includes general insurers who provide services like motor and home insurance, life insurers who provide pensions and annuities, and the Lloyds of London market. There are around 500 insurers operating in the UK.
The PRA places the greatest focus on the firms who present the greatest risks, such as those with a large number of policyholders and insurers offering complex products.


How is insurance regulation divided between the PRA and the Financial Conduct Authority (FCA)?
The focus for the PRA is the financial soundness of insurers - ensuring that firms can pay valid claims if and when they fall due. The focus of the FCA is the fair treatment of customers.


How does the PRA's regulation of insurers differ to that of banks?
The PRA regulates firms according to the level of risk that they pose, looking at how much money they have, systems and controls, management and culture. The PRA and wider Bank understand that insurers are different to banks, both in the way that they deal with customers and the way they are organised, so they have to be supervised differently.
Insurers have a different relationship with their customers compared to banks. Insurance firms often give cover for longer periods, especially when providing pensions or retirement incomes.


Will policyholders be better protected?
Policyholders will be better protected because the PRA has a specific objective to ensure an appropriate degree of policyholder protection.

This means that the Bank works to ensure that long-term savings are protected. Policyholders can continue to save for the long term to provide an income in old age.

The PRA will work to ensure continuity of cover so that valid claims continue to be paid if and when they fall due. This is particularly important as insurance cover is often needed when policyholders are at their most vulnerable.