Published on 22 May 2020
Insurance special purpose vehicles: Updates to authorisation and supervision – PS13/20
This Prudential Regulation Authority (PRA) Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 19/19 ‘Insurance special purpose vehicles: Updates to authorisation and supervision’ (page 2 of 2). It also contains the PRA’s final policy, as follows:
- amendments to the Insurance Special Purpose Vehicle Part of the PRA Rulebook (Appendix 1);
- an updated Supervisory Statement (SS) 8/17 ‘Authorisation and supervision of insurance special purpose vehicles’ (Appendix 2); and
- an updated Multi-arrangement Insurance Special Purpose Vehicle New Risk Assumption Notification Form (Appendix 3).
This PS is relevant to parties who wish to apply for, or have obtained authorisation as, an insurance special purpose vehicle (ISPV). It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II.
Summary of responses
The PRA received one response to the CP that raised a number of questions. The PRA’s feedback is set out in Chapter 2.
The PRA has amended the wording of paragraph 3.4 in the SS to improve readability, and corrected references in paragraph 3.30. The PRA has also corrected typographical errors it identified in the draft policy.
The PRA does not consider these changes alter the policy intent, and would not have a significant impact on firms, or a differential impact on mutuals. Therefore, the PRA has not updated the cost benefit analysis that accompanied the CP.
The new policy will take effect on publication of this PS.
The policy set out in this PS has been designed in the context of the UK’s withdrawal from the European Union and entry into the transition period, during which time the UK remains subject to European law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the European Union take effect.
The PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details.
The final SS attached to this PS should be read in conjunction with SS1/19 ‘Non-binding PRA materials: The PRA’s approach after the UK’s withdrawal from the EU’.
As these changes relate to forms they should be read in conjunction with SS2/19 ‘PRA approach to interpreting reporting and disclosure requirements and regulatory transactions forms after the UK’s withdrawal from the EU’.
Published on 03 September 2019
Insurance special purpose vehicles: Updates to authorisation and supervision – CP19/19
In this Consultation Paper (CP), the Prudential Regulation Authority (PRA) sets out some proposed updates to its approach and expectations in relation to the authorisation and supervision of insurance special purpose vehicles (ISPVs). The proposals would make amendments to the Insurance Special Purpose Vehicles Part of the PRA Rulebook (Appendix 1), including Supervisory Statement (SS) 8/17 ‘Authorisation and supervision of insurance special purpose vehicles’ (Appendix 2) and the Multi-arrangement insurance special purpose vehicle (MISPV) New Risk Assumption Notification Form (Appendix 3).
The CP is relevant to parties who wish to apply for, or have obtained authorisation as, an ISPV. It is also relevant to insurers or reinsurers seeking to enter into arrangements with UK ISPVs as a form of risk mitigation.
The proposals in this CP aim to provide further clarity and elaborate on certain additional aspects of the PRA’s approach and expectations in relation to the authorisation and supervision of ISPVs. The Solvency II requirements in relation to ISPVs have not changed during this period but the PRA and applicants have gained experience of operating the regime in practice. The PRA considers that it would be helpful to update SS8/17 to reflect the experience gained over this period.
Responses and next steps
This consultation closed on Tuesday 3 December 2019. The PRA invites feedback on the proposals set out in this consultation, and on whether there are any other areas where further clarification on the PRA’s approach to the authorisation or supervision of ISPVs would be useful. Please address any comments or enquiries to CP19_19@bankofengland.co.uk.
The PRA notes that there is some potential cross over in text between the proposed updates to SS8/17 and the ISPV – FAQs, however, the main focus of this consultation is the updates to SS8/17, not the FAQs, and so we are not inviting responses on the FAQs in and of themselves. We recognise, however, that consultation responses relating to the SS may also be relevant to the FAQs. Therefore the FAQs may change in light of/in line with the updates to SS8/17, once we have considered the consultation responses.
Pending consideration of the responses to the consultation, the PRA proposes that the draft changes take effect from the date of publication of the final policy.