Solvency II

Solvency II sets out regulatory requirements for insurance firms and groups, covering financial resources, governance and accountability, risk assessment and management, supervision, reporting and public disclosure.

Latest Solvency II updates

15 November 2018: We published final policy on ‘Securitisation: The new EU framework and Significant Risk Transfer’, including the following policy for Solvency II firms:

13 November 2018: We published templates A and B as required under Article 31(2) of the Solvency II Directive. The information is available on the ‘Solvency II templates for the disclosure of aggregate statistical data year-end 2017’ webpage and accurate for year-end 2017 as at 21 August 2018. These supplement ‘Solvency II: Supervisory disclosures, PRA’s supervisory approach and insurance regulations applicable in the UK year-end 2017’, published on 21 August 2018.

This public disclosure is designed to foster a uniform level of transparency and accountability between supervisory authorities.

8 November 2018: Following the letter from Anna Sweeney ‘Market conditions facing specialist general insurers: Feedback from recent PRA review work’ , we received responses from firms, which supervisors have followed up individually with the CEOs of Category 1-3 firms operating in the London Market. The letters included our overall impression of the market’s reaction to our letter, a version of which is presented with the letter.

31 October 2018: We published CP27/18 ‘Solvency II: Adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down’. This consultation closes on Wednesday 2 January 2019, the short consultation period being necessary to provide certainty as soon as possible to firms considering issuing rT1 instruments.

Background

Solvency II came into force on 1 January 2016. You can see the full directive, and read more about Solvency II from the European Insurance and Occupational Pensions Authority.

Firms can apply for a Solvency II approval, a waiver or modification of rules, and find out about regulatory reporting under Solvency II.

Please see The National Archives for historic Solvency II information.

The National Archives

Solvency II news and publications

  • Solvency II updates - 2017

    December 2017

    On 12 December 2017, the PRA published Consultation Paper 27/17 ‘Solvency II: Internal models update’ and ‘Solvency II: PRA review of model change related processes, policies and reporting’. This CP is the second in a series of improvements to the implementation of Solvency II, as referred in the News Release of 25 October 2017.

    On 7 December 2017, an email was sent to principal users of the Bank of England Electronic Data Submission (BEEDS) portal, notifying them of the availability of a User Acceptance Testing (UAT) environment. The UAT environment incorporates Taxonomy 2.2.0 and is being made available for firms to test their Solvency II (annual/ quarterly/ financial stability) submissions in advance of making a legal submission to the BEEDS portal. The UAT environment will be available to firms from Monday 8 January to Friday 19 January 2018.

    On 7 December 2017, the PRA published two updates relevant to Solvency II firms:

    1. Following the General Insurance Stress Test (GIST) we issued on 11 April 2017, Anna Sweeney, Director of Insurance, sent a letter with the results to CEOs of participating firms. Key findings were:

    • the UK general insurance sector in aggregate, and regulated firms at an individual level, are resilient to those scenarios within the regulatory threshold of Solvency II
    • there is no evidence that the level of reinsurance interconnectedness, reflected by the concentration to specific reinsurers, has increased since our last exercise in 2015.

    General Insurance Stress Test 2017 Feedback

    2. Feedback to life insurers on how to improve data quality in the annual Solvency II quantitative reporting templates and national specific templates for 2017 year end reporting, see Regulatory reporting: insurance sector

    November 2017

    On 29 November 2017, the PRA published an updated Remuneration Policy Statement (RPS) reporting template for PRA Category 1 and 2 firms to use for the 2017 performance year to demonstrate compliance with the Solvency II requirements, see the Strengthening accountability webpage

    On 10 November 2017, the PRA published CP24/17 'Solvency II: Internal models - modelling of the matching adjustment'. The CP is addressed to UK Solvency II firms and to the Society of Lloyd’s and its managing agents. It is most relevant to firms with or seeking MA approval and which use a full or partial internal model to determine the SCR, together with UK Solvency II firms when making an assessment as to the appropriateness of the standard formula for their risk profile. This consultation closes on Friday 9 March 2018.

    On 3 November 2017, the PRA published CP22/17 ‘Solvency II: Supervisory approval for the volatility adjustment’. This CP is relevant to insurance and reinsurance companies using or intending to use the VA. The consultation closes on Friday 9 February 2018.

    October 2017

    On 25 October 2017, the PRA issued a news release ‘PRA launches series of improvements to the implementation of Solvency II’.

    On 18 October 2017, the PRA issued three publications relevant to Solvency II firms:

    1. PS25/17 ‘Solvency II: Data collection of market risk sensitivities’ - The associated SS7/17 sets out the PRA’s expectations in respect of the reporting of sensitivities of solvency position to various changes in market conditions by firms with material exposure to market risk. The PRA has also published an Excel template and instructions for firms to use to report on their market risk sensitivities (available on the insurance firms regulatory reporting webpage). The SS refers to the year end 31 December 2017: firms’ submissions of the completed templates will be the solo Quantitative Reporting Template reporting deadline plus four weeks, ie 18 March 2018 for the first submission.
    2. Insurance data release - The PRA has developed tools to analyse the data submitted by firms and this release shares some headline outputs from our high-level analysis. There are two main cohorts in the release: life insurers and general insurers. The metrics are themed around capital, assets and technical provisions (including risk margin). Feedback on the release, and suggestions for future releases are requested by 31 December 2017.
    3. Solvency II: Solvency and Financial Condition Report roundtables – From 4-13 September 2017, the PRA hosted three roundtables with insurers, investors, credit analysts, and equity analysts to discuss the first round of Solvency and Financial Condition Reports (SFCRs) published by EU insurers in 2017. This summary of the roundtables sets out the feedback from both the preparers and users of these reports.

    September 2017

    On 1 September 2017, the Prudential Regulation Authority (PRA) updated its April 2017 public disclosure with templates A and B, as required under Article 31(2)(c) of the EU Solvency II Directive.

    This public disclosure is designed to foster a uniform level of transparency and accountability between supervisory authorities. This information is accurate as at 1 September 2017 and will be updated on a regular basis.

    PDFSolvency II: Template A for the disclosure of aggregate statistical data with regard to insurance and reinsurance undertakings supervised under Directive 2009/138/EC]

    PDFSolvency II: Template B for the disclosure of aggregate statistical data with regard to insurance groups supervised under Directive 2009/138/EC

    April 2017

    On 28 April 2017 we also published supervisory disclosures in line with its obligations under Article 31(2) of the Solvency II Directive. These disclosures include: aggregate statistical data on key aspects of the application of the prudential framework; a table covering the manner of exercise of the options provided for in the Solvency II Directive; links to the texts of insurance regulations applicable in the United Kingdom; and links to the PRA’s supervisory approach.

    This public disclosure is designed to foster a uniform level of transparency and accountability between supervisory authorities. The material published will be of primary interest to PRA authorised insurance companies. This information is accurate as at 28 April 2017 and will be updated on a regular basis.

    PDFSolvency II: Supervisory disclosures, the PRA's supervisory approach and insurance regulations applicable in the United Kingdom

    February 2017

    On 21 February 2017, David Rule, Executive Director of Insurance Supervision, gave a speech at the Association of British Insurers, London.

    Solvency II one year in

    As part of its continual updates to Solvency II legislation, the European Insurance and Occupational Pensions Authority (EIOPA) issued taxonomy update v2.1.0 on 15 July 2016. This is to take effect for receipt of data with a reference date of 31 December 2016 and later. The PRA is implementing the taxonomy to be open for firms reporting Q4 data from 13 February 2017.

  • Solvency II updates - 2016

    December 2016

    On Thursday 15 December we updated our Stress testing webpage to link to the 2016 EIOPA insurance stress test report. We will take forward the EIOPA recommendations with UK insurers as appropriate.

    September 2016

    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 Senior Managers and Senior Insurance Managers Regimes: approvals.

    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.

    May 2016

    On 11 May 2016, we set out the basis of the correct allocation to the lines of business, and in consequence some issues on the unbundling of contracts, that we expect for reporting insurance contracts under employers' liability insurance and motor insurance. The information in the note below is based on the Solvency II Directors’ update letter of 14 July 2015 on employers' 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 (ITS) on Supervisory Reporting.

    PDFBusiness line reporting for employers' liability insurance and motor insurance, May 2016

    On 5 May, to support the our 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.

    February 2016

    On 24 February we 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 us to monitor how firms have been implementing Solvency II, what benefit is being obtained from the various approvals, and to support our decision making and supervisory review. Firms should get in touch with their usual supervisory contact if they have any questions.

  • Solvency II updates - 2015

    December 2015

    On 11 December 2015, we made firms aware that the European Commission adopted three Solvency II Implementing Technical Standards on 2 December 2015 that will all apply from 1 January 2016. These are: i) the Solvency II supervisory reporting; ii) public disclosure; and iii) transparency and accountability. These are available on the European Commission’s website, and will be published in the Official Journal in due course.

    November 2015

    On 7 November 2015, we announced we have concluded our decision-making process in respect of current applications for matching adjustment approval under Solvency II. The decision on each application has been provided to the relevant firm, on an individual basis. The approvals will be published on the Financial Services Register on 1 January 2016.

    July 2015

    On 31 July 2015, EIOPA published the final taxonomy v2.0.0 for Solvency II implementation in 2016. Firms should implement this taxonomy in their reporting systems and should note that there will be a hotfix to this version at the end of September 2015. Further details are available here.

This page was last updated 15 November 2018
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