This policy statement (PS) provides feedback on responses to the Consultation Paper (CP) 26/15, ‘Senior Insurance Managers Regime: implementation proposals for non-Solvency II firms’, together with CP27/15, ‘The prudential regime for non-Solvency II insurance firms and consequential amendments’. It also includes links to grandfathering forms for small and large non-Solvency II firms to be submitted to the regulators by 8 February 2016 (see Senior Insurance Managers Regime - Forms in Related Links).
The appendices set out the final rules for:
- the replacement of the current Approved Persons Regime (APR) with the new Senior Insurance Managers Regime (SIMR) for firms that are outside the scope of Solvency II (the rules in the appendix complement the rules attached to Policy Statement PS 21/15);
- the prudential regime for those insurance firms that are outside the scope of the Solvency II; and
- other consequential amendments to the PRA Rulebook that relate to all insurance firms.
In CP26/15, the PRA proposed rule changes for firms that are outside the scope of Solvency II in relation to the:
- application of the SIMR to those firms with assets of more than £25 million in relation to regulated activities;
- appointment of actuarial function holders and with-profits actuaries at some of these firms;
- transitional arrangements for these firms;
- forms relating to the SIMR for these firms; and
- retention of records by these firms in respect of the allocation of responsibilities to their senior managers.
In CP27/15, the PRA proposed draft rules that would only apply to firms outside the scope of Solvency II from 1 January 2016. The PRA did not propose significant changes to policy but presented rules that reflect the current prudential regime in a more coherent and consistent manner in line with other Parts in the new PRA Rulebook.
This PS is relevant to those insurance firms that are not within the scope of Solvency II. In addition, these rules will cover certain run-off firms, so long as these firms are not subject to the Solvency II rules in accordance with Transitional Measures 2 in the Solvency II Firms section of the PRA Rulebook. All of these firms are described collectively in this PS as non-Directive firms (NDFs). In accordance with the definition of ‘small non-directive insurer’ in PS21/15 (as amended in this PS), NDFs with assets of £25 million or less in relation to regulated activities are termed in this PS ‘small NDFs’, while other NDFs are termed ‘large NDFs’.
There has been only one change of policy as a result of the responses received. This is to modify the period over which the asset threshold is assessed for the purpose of distinguishing large NDFs from small NDFs. This will provide firms with more time to prepare for any change between small and large NDF status, and thereby reduce costs. Chapters 2 and 3 set out feedback to responses received to the PRA’s proposals.