Review of Solvency II: Quantitative Impact Study (QIS)

This page sets out information regarding the PRA’s Quantitative Impact Study (QIS), which will support the review of Solvency II. Firms should refer to this page for updates about the QIS.

Updates

29 July 2021

On Tuesday 3 August, we will be hosting a roundtable discussion to cover general comments or questions regarding the QIS instructions and templates. This will be followed by a focussed discussion on the Risk Margin elements of the QIS. 

On Tuesday 27 July, we sent invitations to all insurance firms where we held contact details centrally, confirming  that up to two representatives per firm would be able to attend. We encourage all firms participating in the QIS to attend. If you have not received an invitation and would like to attend, please contact your relevant supervisor and InsuranceData@bankofengland.co.uk.

20 July 2021 

On Tuesday 20 July 2021, we published the QIS for the Solvency II review – please see links to the materials below. The deadline for submitting responses is Wednesday 20 October 2021. 

The QIS exercise will gather data to support the review of Solvency II. It should not be taken as an indication of the Government’s or our preferred courses of action.

We are writing to a number of firms through the Bank of England Electronic Data Submission (BEEDS) portal inviting them to participate in the exercise to ensure that we have an appropriate breadth and level of coverage in the industry for our study. If you receive this invitation, we would ask that you prioritise resource to complete the exercise to the standard needed to inform policy making. We welcome responses from all other UK regulated firms should they wish to participate.

We encourage participants to engage with the QIS early and provide any feedback or queries within the first few weeks of this publication. Please raise these to your usual supervisory contact or InsuranceData@bankofengland.co.uk. Please also refer to the QIS Q&A below for further information, which will be kept updated over the period. 

In addition, we have published a Dear CEO letter that sets out our approach to the QIS, and the thinking on two key areas being assessed under it - the risk margin and the matching adjustment (MA). 

In August, we will release a series of qualitative questions to inform our thinking about other aspects of Solvency II reform. 

Background: Solvency II Reform

On Thursday 1 July 2021 HMT published its Response to the Call for Evidence setting out the responses received and the next steps on the reform of Solvency II. 

On Tuesday 23 June 2020, the Government announced it would review certain features of the Solvency II regulatory regime for insurance firms. In October 2020, HM Treasury (HMT) invited all interested stakeholders to share views on the issues set out in the Call for Evidence. The Call for Evidence period closed on Friday 19 February 2021.

What is the Quantitative Impact Survey (QIS)?

The QIS is a data collection exercise that will assist our analysis of potential reform options. It will mainly focus on those areas that are quantifiable on an insurer’s balance sheet. It is important to note that the scenarios tested in the QIS do not in themselves represent reform proposals.

The QIS will cover three main areas: (i) the calculation of the Matching Adjustment; (ii) Risk Margin; and (iii) Transitional Measure on Technical Provisions (TMTPs). The QIS will also contain qualitative questions to gather information to support the development of some areas of Solvency II reform that are less straightforward to assess quantitatively.

What do I need to know?

The QIS was launched on Tuesday 20 July 2021 and firms have been asked to respond within three months. The QIS is relevant to all PRA-regulated insurance firms. Participation in the QIS is on a voluntary basis. However, given the importance of the Solvency II review on the UK insurance industry, we strongly encourage UK insurance firms from all sectors to participate. This will allow us to understand the potential impact of reforms on different insurance sectors, as well as the industry as a whole.

It is important for us to receive high quality data from the QIS, and so we ask that firms undertake an appropriate level of validation before it is submitted. The QIS is expected to be a significant technical undertaking for participating firms, especially Life Insurers. However, we have given careful consideration to only ask firms for data that in our view is necessary and useful, while having regards to the burden placed on firms participating in the QIS.  

Other requests to support the review of Solvency II

MA Asset and Liability Information Request

On Wednesday 16 June 2021, we released an information request through BEEDS to firms with a MA approval. The request asked for both granular asset data and asset and liability cashflow data, relating to the relevant firms’ MA Portfolios under the existing Solvency II regime.

This information request is not part of the QIS. However, it will help to inform our review of Solvency II, particularly on matters relating to the MA. Completion of the request is voluntary, however we strongly encourage firms that have approval to use the MA to participate. 

The MA asset and liability information request template is available for firms to complete.

If you have any questions, please refer to the MA asset and liability information request Q&A.

Contact

If you have any queries regarding the QIS, please refer to the QIS Q&A or contact InsuranceData@bankofengland.co.uk.
This page was last updated 29 July 2021

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