This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals to update Supervisory Statement SS6/16 ‘Maintenance of the ‘transitional measure on technical provisions’ under Solvency II’.
The proposals are aimed at:
- providing additional guidance for firms proposing to use a proportionate approach to the transitional measure on technical provisions (TMTP) recalculation methodology; and
- providing further clarity on the consistency of Solvency I and Solvency II methodologies.
The CP is relevant to: UK insurance and reinsurance firms within the scope of Solvency II that have been granted approval to use the TMTP; the Society of Lloyds; and firms that are considering applying to use this transitional measure.
In the PRA’s response to the Treasury Select Committee’s (TSC) report on Solvency II, it recognised the burden of maintaining multiple systems for recalculation of the TMTP and committed to considering the feasibility of simplifying the TMTP calculations.
The proposed updates to SS6/16 (appendix) should be read in conjunction with
- the Transitional Measures Part of the PRA Rulebook;
- the Solvency 2 Regulations 2015 (2015/575);
- the Solvency II Directive (Article 308(d));
- the European Insurance and Occupational Pension Authority (EIOPA) Level 3 Guidelines; and
- SS17/15 ‘Solvency II: transitional measures on risk-free interest rates and technical provisions’.
Responses and next steps
This consultation closed on Wednesday 21 August 2019. Please address any comments or enquiries to CP11_19@bankofengland.co.uk.
The proposals set out in this CP have been designed in the context of the current UK and EU regulatory framework. The PRA has assessed that the proposals will not be affected in the event that the UK leaves the EU with no implementation period in place.