On 12 December 2013, the Prudential Regulation Authority (PRA) issued a Supervisory Statement on ‘Solvency II: applying EIOPA’s preparatory guidelines to PRA-authorised firms’. The draft Supervisory Statement was published on 21 October 2013 in consultation paper CP9/13. The consultation began on 21 October 2013 and closed on 15 November 2013.
Summary of key issues covered by the Supervisory Statement
In September 2013, the European Insurance and Occupational Pensions Authority (EIOPA) published the final guidelines for the preparation of Solvency II (‘the guidelines’). The guidelines cover four areas which EIOPA considers fundamental to ensure effective and convergent preparations for Solvency II, starting from 1 January 2014. In this Supervisory Statement, the PRA provides clarification on the:
i. expectation of firms in respect of the guidelines as they prepare for Solvency II;
ii. approach to implementing the guidelines; and
iii. interpretation of aspects of the guidelines.
Many of the guidelines represent good practice in conformity with existing rules and should not present an additional burden for many firms.
The Supervisory Statement includes the PRA’s responses to comments received during the consultation on EIOPA’s guideline on securitised instruments, the PRA’s expectations of the actuarial function in providing an opinion on underwriting policy and reinsurance arrangements, and the practicability of using eXtensible Business Reporting Language for reporting during the preparatory period.