CP22/25 – UK Solvency II reporting and disclosure: Post-implementation amendments

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Responses are requested by Wednesday 4 March 2026.

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Responses can be sent by email to: CP22_25@bankofengland.co.uk.

Alternatively, please address any comments or enquiries to:
Reporting, Disclosure and Data Strategy, Prudential Policy
Prudential Regulation Authority
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EC2R 6DA

1: Overview

1.1 The Prudential Regulation Authority (PRA) completed its review of Solvency II reporting and disclosure requirements with the publication of PS15/24 – Review of Solvency II: Restatement of assimilated law. The PRA considered that the resulting reforms removed a substantial volume of templates from the previous reporting package.^{footnote [1]} Following implementation at the end of 2024, the PRA has received feedback and queries from firms regarding some of the reporting requirements. As a result, the PRA has identified areas requiring minor clarifications, as well as inconsistencies and errors that need to be addressed. The PRA has also self-identified some specific elements of the package that would benefit from adjustment to better mitigate specific risks. This consultation paper (CP) sets out the PRA’s proposals in these areas.

1.2 In Chapter 2, the PRA proposes to amend reporting and disclosure templates and instructions to address firm feedback and resolve inconsistencies and errors. These proposals aim to further improve the clarity of reporting requirements and data quality. The PRA also proposes a reporting change for third-country insurance branches linked to CP20/25 – Insurance third-country branches: policy implementation and other updates and some minor technical updates.

1.3 In Chapter 3, the PRA proposes an additional targeted reporting change. This would introduce a requirement for third-country branches to report total projected FSCS liabilities data to help the PRA effectively implement its approach to Insurance Branch Supervision (as set out in statement of policy (SoP) 7/24 – The Prudential Regulation Authority’s approach to insurance branch authorisation and supervision).

1.4 In Chapter 4, the PRA proposes to transfer the reporting format of the Matching Adjustment Asset and Liability Information Return (MALIR) templates from Excel to eXtensible Business Reporting Language (XBRL). This fulfils a commitment made in CP19/23 – Review of Solvency II: Reform of the Matching Adjustment to retain Excel-based reporting for a minimum of two years while assessing the need for an alternative reporting interface. At the same time the PRA intends to remove known duplicative reporting and inconsistencies between MALIR and the Quantitative Reporting Templates (QRTs). Additionally, the PRA also proposes to change the approach to reporting paired assets and derivatives in the MALIR templates.

1.5 The CP is relevant to UK Solvency II firms, the Society of Lloyd’s and its members and managing agents, insurance and reinsurance groups, insurance and reinsurance undertakings that have a UK branch (third-country branch undertakings), and UK holding companies.

1.6 The PRA considers that the proposals in this CP advance, or continue to advance, the PRA’s primary objectives of promoting the safety and soundness of PRA-authorised firms and securing an appropriate degree of policyholder protection. The proposed amendments are intended to improve clarity and consistency of existing reporting requirements and data processing, thereby improving the quality of submitted information and supporting effective supervisory oversight. The proposed collection of projected FSCS liabilities data would enable a timely assessment by supervisors of the resilience and risk profile of third-country branches, advancing the PRA’s primary objectives.

1.7 The PRA considers that these proposals are unlikely to have a material impact on:

• the PRA’s secondary objective of facilitating effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities; and
• the PRA’s secondary objective of facilitating, subject to aligning with the relevant international standards, the international competitiveness of the economy of the UK and its growth in the medium to longer term.

1.8 In developing these proposals, the PRA has had regard to its framework of regulatory principles. The ‘have regards’ matters which the PRA considers are significant to the proposals set out in this CP include the principle that a burden imposed on firms should be proportionate to the benefit resulting from the imposition, and the need to use the PRA’s resources in the most efficient and economic way. The PRA has had regard to other factors as required, as set out in Chapter 7.

1.9 The PRA estimates that there would be a one-off implementation cost for firms to implement the proposals in this CP. At an industry level this is estimated in the range of £6.5 million to £12.2 million.^{footnote [2]} The PRA considers that the proposals would have a minimal impact on ongoing reporting costs.

1.10 The PRA considers that the proposed amendments deliver benefits related to clearer and more consistent reporting requirements, including the removal of errors and inconsistencies identified post-implementation and addressing firm feedback. Changes should improve data quality and reporting efficiencies. The introduction of projected FSCS liabilities reporting for third-country branches would also enable more effective oversight by supervision in line with the PRA’s approach to Insurance Branch Supervision. In the PRA’s view these benefits are estimated to exceed the one-off implementation costs. Further details of the Cost Benefit Analysis (CBA), including the methodology used, are set out in Chapter 6.

1.11 The PRA’s Cost Benefit Analysis Panel was not consulted on the CBA, as the estimated annualised net direct cost of the proposals falls below the materiality threshold published in SoP14/24 – The PRA’s Approach to Cost Benefit Analysis.

Key updates to PRA Rulebook and other materials

1.12 The proposals in this CP would result in changes to the following:

• Reporting Part of the PRA Rulebook (Appendix 1);
• reporting and disclosure templates and instructions corresponding to the individual proposals in Chapters 2, 3 and 4, and those set out in the full list of templates and instructions being amended in Appendix 2; and
• supervisory statement (SS) 37/15 – Solvency II: internal model reporting codes and components (SS37/15, Appendix 3) (deleted).

1.13 Minor consequential amendments will also be made to:

• SS11/16 – Solvency II: External audit of, and responsibilities of the governing body in relation to, the public disclosure requirement (SS11/16, Appendix 4);
• SS40/15 – Solvency II: reporting and disclosure (SS40/15, Appendix 5);
• SS7/18 – Solvency II: Matching adjustment (SS7/18, Appendix 6); and
• Matching Adjustment supplementary information form from Insurance rule permissions and notifications (Appendix 7).

Implementation

1.14 The PRA acknowledges that reporting changes will require system updates and other one-off implementation costs for firms, so sufficient advance notice is needed to support planning. The PRA therefore proposes that the implementation date for the changes resulting from this CP would be for reporting reference dates falling on or after Thursday 31 December 2026.

1.15 The PRA intends to publish a public working draft (PWD) taxonomy following this CP that sets out the proposed changes to help firms prepare.

Responses and next steps

1.16 This consultation closes on Wednesday 4 March 2026. The PRA invites feedback on the proposals. Please address any comments or enquiries to CP22_25@bankofengland.co.uk.

1.17 When providing your response, please tell us whether or not you consent to the PRA publishing your name, and/or the name of your organisation, as a respondent to this CP.

1.18 Please also indicate in your response if you believe any of the proposals in this consultation paper are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

2: Proposed Minor Amendments

2.1 This chapter sets out proposed amendments to UK Solvency II reporting and disclosure templates and instructions. Updates to templates that have an impact on data currently collected each have their own section. Key amendments to other templates and instructions are summarised in the final section of this chapter. A complete list of templates and instructions being changed in this CP can be found in Appendix 2. The draft templates and instructions reflecting the amendments are also included in this publication.

Non-life income, expenditure and business model analysis

2.2 A new template variant (IR.05.04.04) is proposed for annual group reporting, and solo and group disclosure covering non-life income and expenditure. Consequently, IR.05.04.02 would be used exclusively for quarterly solo, group, and branch reporting. This change would allow the amendments set out in paragraphs 2.3 and 2.4 to be effectively implemented.

2.3 Based on received feedback, the PRA proposes not to require the item ‘Total expenditure’ for quarterly reporting in IR.05.04.02, and to require the item ‘Total income’ in IR.05.04.04. This is to ensure consistency: neither ‘Total income’ nor ‘Total expenditure’ are required to be reported in IR.05.04.02; while both ‘Total income’ and ‘Total expenditure’ are required to be reported in IR.05.04.04.

2.4 The PRA proposes to correct an error in IR.05.04 that requires branches to report dividends. The IR.05.04 instructions would be updated to explicitly state that dividends do not apply to branches. Furthermore, to ensure consistency in the reporting of dividends by groups between IR.05.03 (life income and expenditure) and IR.05.04, the PRA proposes that dividends would be required to be reported for the reporting period in IR.05.04.04 annual reporting for groups, and in IR.05.04.02 quarterly reporting for solos and groups.

2.5 IR.05.04 currently has a separate variant for annual branch reporting (IR.05.04.07). However, this is inconsistent with the approach taken in IR.12.01 (life technical provisions) and IR.17.01 (non-life technical provisions) where differences between solo and branch reporting are addressed through the instructions. The PRA proposes to remove the branch variant for branch annual reporting of IR.05.04 and instead have a single annual variant that covers solos and branches (IR.05.04.01). The instructions would be revised to specify which items should be reported by branches; this update would not alter current reporting requirements.

2.6 The PRA proposes introducing new columns in IR.05.04 for Motor liability, Motor other, Fire and other damage to property and General Liability to improve the consistency between the lines of business reported in IR.05.04, and the lines of business reported in other non-life templates and in Technical Provisions – Further information Annex 1. The PRA also proposes that current sub-class level reporting for these lines of business (personal / non-personal, and the sub-classes of general liability) are required to be reported only for insurance (direct) business. This latter proposal follows feedback from firms regarding the availability of accepted proportional reinsurance data split between these sub-classes.

2.7 Consistent with this proposal, the PRA also proposes to resolve an inconsistency between IR.05.04 and IR.05.03 (life income and expenditure) by ensuring that the rows capturing income and expenditure measures include both a row for totals and separate rows for insurance (direct) business and accepted reinsurance.

2.8 To align with the proposed changes in line of business reporting in IR.05.04, discussed in paragraph 2.6 above, the PRA proposes to remove the sub-class columns in IR.05.06 (non-life premiums and claims by country) and add new columns for Motor liability, Motor other, Fire and other damage to property and General Liability.

2.9 In addition to the amendments set out in this section, the PRA proposes to make minor updates to the IR.05.04 template and instructions to clarify reporting requirements. This includes providing guidance for composite insurers on reporting between non-life template IR.05.04 and life template IR.05.03, as well as specifying that gross written premiums split by contract duration of 12 months or less and more than 12 months is required only for insurance (direct) business. Furthermore, minor errors identified within the template and instructions would be rectified.

Non-life annuities information

2.10 The PRA uses IR.16.01 to monitor non-life annuity claims arising from direct insurance. As part of the UK Solvency II reporting and disclosure reforms implemented in PS15/24, IR.16.01 introduced reporting of the change in estimated future claim payments from the date when the claim became a non-life annuity and the claim provision progression from the point in time when the claim became a non-life annuity. However, the PRA considers that a lack of clarity in the instructions caused inconsistencies in the reporting of this information which posed challenges to its effective use for supervisory purposes.

2.11 The PRA therefore proposes amendments to the IR.16.01 reporting requirements to: clarify that reporting of the change in estimated future claim payments from the date when the claim became a non-life annuity applies to claims designated as a non-life annuity in the reporting period only; and to clarify that the reporting of the non-life annuity provision progression applies only to claims designated as a non-life annuity during or after the first financial year ending on or after 31 December 2024.

2.12 As a consequence of these amendments two existing columns would be removed from, and two columns added to, IR.16.01. Amendments to the instructions would be made to reflect these changes, along with other minor clarifications to support firms in reporting this template.

Transition to NACE 2.1 codes

2.13 Templates IR.06.02 (list of assets) and IR.11.01 (assets held as collateral) currently require reporting according to the Nomenclature of Economic Activities (NACE) 2.0 classification. However, NACE 2.0 is being phased out and replaced by the NACE 2.1 classification. The PRA proposes to transition to NACE 2.1 codes for reporting in IR.06.02 and IR.11.01. This change also impacts the proposed new MALIR XBRL template MA.01.01 (see Chapter 4).

2.14 To allow sufficient time for firms to prepare, NACE 2.0 codes would continue to be used for all reference dates up to 31 December 2026, with NACE 2.1 reporting introduced for reference dates from 1 January 2027. A new column would be added to the affected templates for NACE 2.1 codes – firms should leave this blank for 31 December 2026.

2.15 Amendments would be made to the template instructions to reflect these changes, along with other minor clarifications and error fixes in IR.06.02 and IR.11.01 identified post-implementation.

Removal of reporting requirement from Branch Legal Entity template

2.16 The basic information – branch legal entity reporting template (IR.01.04.07) was introduced as part of the UK Solvency II reporting reforms at year-end 2024 to cover key data for third-country insurance undertakings with branches. Since implementation, the PRA has identified that interpretation of the ‘Total assets available to UK policyholders’ row differs across reporting firms. Some firms report it at undertaking level, others at branch level. This has led to inconsistent reporting and queries from firms.

2.17 The PRA notes that third-country branches report ‘Total Assets’ as part of the balance sheet template (IR.02.01.07). In CP20/25 the PRA proposed, as part of the proposed restatement of remaining EIOPA branch guidelines, to convert the existing expectation to hold available assets to cover the branch provisions for direct insurance obligations into rules in the Third Country Branches Part of the Rulebook.^{footnote [3]} The PRA considers that the clarity provided by this proposal would mean that the reporting of ‘Total Assets’ in the balance sheet (IR.02.01.07) would be sufficient for supervisory oversight of available assets. The PRA therefore proposes to delete the row ‘Total assets available to UK policyholders’ in IR.01.04.07.

Volatility Adjustment (VA) reporting update from CP20/25

2.18 In CP20/25 the PRA proposed to remove branch eligibility for VA permissions from the Rulebook.^{footnote [4]} To implement the related reporting changes that were mentioned in CP20/25, the PRA proposes to remove the ‘Volatility Adjustment’ row from the basic information – general reporting template (IR.01.02.07) and update the corresponding instructions.

2.19 The PRA also proposes to clarify in the instructions for the life technical provisions reporting template (IR.12.01) and the non-life technical provisions reporting template (IR.17.01) that rows related to VA are not applicable to third-country branches.

Deletion of SS37/15 – Solvency II: internal model reporting codes and components 

2.20 The PRA proposes to relocate information on internal model reporting codes and components from the Appendix of SS37/15 – Solvency II: internal model reporting codes and components, into the instructions for template IR.25.05. IR.25.05 covers the Solvency Capital Requirement (SCR) components for both partial and full internal models. SS37/15 related to templates S.25.02 and S.25.03, which were removed as part of the UK Solvency II reforms and partly replaced by IR.25.05. The PRA also proposes to withdraw SS37/15 as it now relates solely to reporting for IR.25.05, and the relevant information would be included in the instructions. The IR.25.05 template and instructions would also be updated with minor amendments for consistency with other updates.

Other minor template and instructions amendments

2.21 The PRA proposes minor changes to templates and instructions to address inconsistencies, correct errors, improve reporting efficiency, and clarify requirements. Feedback and reporting queries since implementation have contributed to these amendments. The key updates are highlighted below, with Appendix 2 detailing the complete list of templates and instructions that the PRA is proposing to amend. Key updates are to:

• simplify the options in IR.01.01 (Content of the submission) giving the reason where a template is not reported;
• update instructions for templates IR.06.02, IR.06.03, IR.08.01 and IR.11.01 that contain ‘Asset ID Code and Type of code’ so that the instructions for Type of Code are consistent with Financial Instruments identification based on the ‘code’ and ‘type of code’ section of the XBRL filing manual pages 35-36;
• amend instructions for Fund/Portfolio number in IR.08.01 (derivatives), IR.30.07 and IR.30.08 (reinsurance) to identify matching adjustment portfolios in addition to ring-fenced funds. This would provide consistency with MALIR analysis (new Matching Adjustment (MA) templates);
• amend instructions to IR.14.01 to exclude claims expenses from C0070 (claims paid);
• revise instructions for IR.19.01 and IR.19.02 on non-life claims so that if the best estimate undiscounted gross provision for claims outstanding for a business line or currency is negative, the provision should be set to zero (instead of its absolute value), allowing materiality criteria to apply as intended (also applies to IR.20.01). Clarify that acquisition costs are included in premiums when deducted before the insurer receives the premium or when paid by the insurer after receipt;
• clarify reporting requirements for certain new templates introduced as part of the UK Solvency II reporting reforms. These templates include IR.21.04 covering cyber underwriting risk, as well as IR.30.05, IR.30.06, IR.30.07 and IR.30.08 focused on reinsurance reporting;
• align template drop down options related to ring-fenced funds, matching adjustment portfolio and the remaining part; and
• ensure alignment with PRA Rulebook terminology as set out in Technical Provisions – Further Requirements 21.1 by updating ‘claims provisions’ in template titles and instructions to ‘provision for claims outstanding’ for general insurance business obligations.

 Updates to PRA Rulebook and other materials 

2.22 The Reporting Part of the PRA Rulebook would be updated to reflect the amendments to the templates and instructions as set out in this chapter (see Appendix 1). Consequential changes would also be made to SS11/16 – Solvency II: External audit of, and responsibilities of the governing body in relation to, the public disclosure requirement (SS11/16, Appendix 4) and SS40/15 – Solvency II: reporting and disclosure (SS40/15, Appendix 5).

3. Projected FSCS liabilities data for third-country branches

3.1 As part of its approach to insurance branch authorisation and supervision (SoP7/24 – The Prudential Regulation Authority’s approach to insurance branch authorisation and supervision), the PRA sets out the factors that it considers in its assessment of the risks associated with third-country branch undertakings. This includes outwards reinsurance arrangements, where the PRA undertakes case by case assessments. For example the PRA assesses levels of intra-group reinsurance, given that high levels may indicate dependence of the third-country branch undertaking on a group entity, which can undermine incentives for prudent risk management and the PRA’s ability to supervise, increasing risks to policyholder protection. 

3.2 As set out in SoP7/24, branches with significant FSCS-protected liabilities as a proportion of total branch liabilities should expect more intensive supervisory scrutiny of reinsurance arrangements to ensure UK policyholder protection.

3.3 The PRA currently collects FSCS data for the reporting period from third-country branches. However, this is not adequate to assess whether a branch is likely to significantly increase its FSCS-protected liabilities as a proportion of total branch liabilities in the near future, potentially increasing risks to policyholder protection. The PRA therefore proposes to amend the non-life income, expenditure and business model analysis reporting template (IR.05.04) to include total projected FSCS liabilities in the three business plan years for third-country branch undertakings, alongside the existing data collected for the reporting period. The PRA has sought to limit the impact of this additional reporting on firms by excluding the line-of-business breakdown for the projected data in IR.05.04.

3.4 The PRA considers that reliance on data for the reporting period only could lead to situations where the firm’s outwards reinsurance programme for the current year would need to be altered to meet the PRA’s expectations, which could be costly and disruptive for firms whose programme operates on a yearly basis. The PRA has considered asking for projections for only one business plan year however, on current reporting schedules, this could also mean firms need to adjust the programme for the current year. Having the projected data for three years would reduce that risk, as any issues could be identified well in advance which could in turn reduce potential costs for industry. The PRA particularly invites feedback from third-country branches on this rationale and the availability of three years of projected FSCS liabilities data.

3.5 This publication contains the proposed updated draft template and instructions, along with other amendments to IR.05.04 set out in Chapter 2 (paragraphs 2.2–2.9).

4. MALIR transfer to XBRL and other amendments

 4.1 The PRA proposes to move the Matching Adjustment Asset and Liability Information Return (MALIR) templates from Excel to eXtensible Business Reporting Language (XBRL) format and to include them in the Bank of England Insurance Taxonomy. This proposal delivers on the commitment set out in CP19/23 – Review of Solvency II: Reform of the Matching Adjustment to retain Excel-based reporting for a minimum of two years while assessing the need for an alternative reporting interface. Transferring to XBRL would align MALIR with the broader UK Solvency II reporting framework, which is largely reported in XBRL as part of the Bank of England Insurance Taxonomy.

4.2 In conjunction with the transfer to XBRL, the PRA proposes to remove duplication and ensure consistency between MALIR and the Quantitative Reporting Templates (QRTs). This comprises:

1. Deleting QRT IRR.22.02 – Matching adjustment portfolio projection of future cash flows, as all information except derisked asset cash flows, is contained in MALIR 3 – Liability cash flows. Derisked asset cash flows would be transferred from IRR.22.02 to the new XBRL template MA.02.01 – Portfolio cash flows (which replaces MALIR 3).
2. Addressing differences in current reporting between IRR.22.02 and MALIR 3 by reducing the frequency of cash flow reporting in MA.01.01 – Portfolio assets (which replaces MALIR 2) and MA.02.01 – Portfolio cash flows (which replaces MALIR 3) from monthly to annual, thereby lowering the reporting burden on firms.
3. Amending QRT IRR.22.03 – Matching adjustment calculation, for the changes brought about by the Matching Adjustment (MA) reforms introduced as part of PS10/24 – Review of Solvency II: Reform of the Matching Adjustment and moving the supporting narrative documentation from MALIR 4 – Portfolio output to a separate unstructured return to be submitted via Bank of England Electronic Data Submission (BEEDS). As these changes make MALIR 4 redundant, the PRA proposes its deletion without replacement.
4. Introducing issuer sector Nomenclature of Economic Activities (NACE) 2.1 codes for reference dates on or after 1 January 2027. See paragraphs 2.13-2.15 for further details on this proposal.
5. Moving the supporting narrative documentation from MALIR 3, MALIR 4 (as set out above), MALIR 5, MALIR 6 and MALIR 7 to a separate unstructured return to be submitted using BEEDS. This ensures consistency with the approach taken in QRTs (Analysis of Change and Quarterly Model Change).
6. Updating the reporting units in the MALIR templates from £ million to £’s to align with QRTs.
7. Further minor changes, including to amend options in the templates and to address inconsistencies.

4.3 Table 1 below sets out the proposed changes from paragraph 4.2 along with the mapping of existing MALIR Excel templates to their corresponding XBRL templates. The draft templates and instructions are included in this publication.

Reporting of paired assets and derivatives

4.4 The PRA proposes to change the approach to reporting paired assets and derivatives in MALIR. Firms currently have the option to report on a paired or unpaired basis. However, to ensure consistent reporting and support more granular analysis, the PRA proposes requiring firms to report on an unpaired basis. Additional disclosure on pairing would be simplified relative to the current approach and would only require firms to identify, within the new XBRL template MA.01.01 – Portfolio assets (which replaces MALIR 2), the Asset ID Code of the paired investment where a derivative is paired with a single investment.

Updates to PRA Rulebook and other materials 

4.5 The Reporting Part of the PRA Rulebook would be updated to reflect the XBRL templates MA.00.01, MA.00.02, MA.01.01, MA.02.01 and MA.03.01 and supporting narrative documentation as set out in Table 1 (see Appendix 1). For consistency, the PRA also proposes minor drafting changes to rules relating to templates QMC.01 and AoC.01, including to use the expression ‘supporting narrative documentation’ (rather than ‘supporting qualitative information’ or ‘supporting qualitative analysis’) throughout. SS7/18 – Solvency II: Matching Adjustment would also be updated (Appendix 6), along with the Matching Adjustment supplementary information form (Appendix 7).

5. PRA Objectives Analysis

5.1 The proposals set out in Chapters 2, 3 and 4 advance, or continue to advance, the PRA’s primary objectives of promoting the safety and soundness of PRA-authorised firms and securing an appropriate degree of protection for policyholders.

5.2 The majority of the proposed amendments in Chapter 2 aim to improve clarity and consistency of existing regulatory reporting and disclosure requirements. This includes changes to certain templates and instructions (IR.05.03, IR.05.04, IR.05.06 and IR.16.01) to improve the quality of the data submitted to more effectively support supervisory oversight. The proposed approach for firms to transition from reporting NACE 2.0 codes to NACE 2.1 codes gives firms time to adjust to the new codes, therefore ensuring the quality of data reported. The transfer of internal model reporting codes to IR.25.05 instructions and the subsequent deletion of SS37/15 consolidates relevant template information in the instructions making requirements clearer for firms. Clear, consistent reporting and disclosure requirements, and improvements in data quality continue to advance the PRA’s primary objectives.

5.3 Updates to third-country branch reporting to remove certain reporting requirements (consequential reporting change to IR.01.02 from CP20/25 and amendment to IR.01.04) would lower the reporting burden on these firms without affecting the PRA’s ability to monitor risks to its objectives.

5.4 The proposed collection of projected FSCS liabilities data set out in Chapter 3 advances the PRA’s primary objectives by supporting firm-specific and horizontal supervision to help identify when the outwards reinsurance arrangements of a third-country branch undertaking need to be reassessed. This would facilitate a timely assessment by supervisors of its resilience and risk profile. Early interventions based on the projected data could reduce burden on both firms and the PRA.

5.5 The PRA considers that the proposals in Chapter 4 would advance its primary objectives. Transferring the reporting format of MALIR from Excel to XBRL would improve the processing and security of information reported. The PRA also considers that amendments to eliminate duplication with QRTs and reduce the asset and liability cash flows to annual reporting would lower the reporting burden for firms without affecting the PRA’s ability to monitor risks to its objectives. Furthermore, requiring assets and derivatives to be reported on an unpaired basis would enable the PRA to perform more granular analysis of exposures, including concentration to individual counterparties. This supports the PRA’s ability to identify and monitor potential firm-specific and systemic risks and thereby help maintain market stability.

5.6 The PRA considers that the proposals in this CP are unlikely to have a material impact on the PRA’s secondary competition or competitiveness and growth objectives.

6. Cost Benefit Analysis (CBA)

Benefits

6.1 Clear and consistent reporting requirements reduce ambiguity, improve data accuracy and lower the risk of errors. The proposals as set out in Chapter 2 would improve data quality for the PRA and reduce follow-up queries from firms. Where it has been identified that data is no longer required or does not adequately meet a supervisory need, requirements are proposed to be removed or amended, ensuring efficient reporting.

6.2 The proposed collection of projected FSCS liabilities data from third-country insurance branches, as set out in Chapter 3, would support the PRA’s case-by-case assessment of reinsurance arrangements, enabling more efficient and effective oversight by supervision in line with the PRA’s approach to Insurance Branch Supervision. Having the projected data would allow the PRA to identify if a branch is likely to significantly increase its FSCS-protected liabilities as a proportion of total branch liabilities in the near future and therefore to intervene early if required. This should reduce situations where the firms’ outwards reinsurance programmes would need to change at short notice, leading to potential cost and disruption for the affected firm.

6.3 The PRA considers that moving MALIR to XBRL, as proposed in Chapter 4, would improve operational efficiency and security by supporting more efficient, automated processing and error reduction in data collection. Removal of duplication with QRTs supports reporting efficiency. Standardising reporting of assets and derivatives on an unpaired basis would ensure a consistent reporting approach across firms. The PRA considers this would strengthen its ability to assess potential systemic risks, in particular aggregate exposures to the same counterparty across the market.

Costs

6.4 Implementation costs have been estimated following the approach used in CP12/23 –Review of Solvency II: Adapting to the UK insurance market (Chapter 7). Based on information provided by firms as part of the 2022 Solvency II reporting costs survey, the template level cost of change for a median firm in each (size) category is adjusted for inflation and, where appropriate, reduced to reflect proposals that remove data requirements, or amend reporting requirements without requiring additional data. The median firm impact is then projected to the population of affected firms to estimate the total cost for all firms in each category. Where additional cost information has been available for specific proposals this has been used in place of these cost estimates.

6.5 A range of the costs has been provided to better account for and reflect the variation of insurance and reinsurance firms both in terms of size and business models, and account for the variation in survey responses. The estimates reflect the response rate and quality of the data shared with the PRA through the survey, and should be treated as indicative, subject to uncertainty and sensitive to the underlying assumptions.

6.6 To implement the proposals set out in Chapter 2 and Chapter 3, the PRA estimates that the total cost to industry (all firms in scope of UK Solvency II reporting) is in the range of £6 million to £11.3 million.^{footnote [5] footnote [6]} Average firm-level estimated one-off implementation cost ranges are: £72,000 to £134,000 for large insurers (cat 1-2); £1,000 to £2,000 for small insurers (cat 3-4 and mutuals); £64,000 to £118,000 for insurance groups; £41,000 to £76,000 for cat 1-2 third-country branches; and, £800 to £1,400 for cat 3-4 third-county branches.

Third-country branch undertakings have previously been asked to report their projected FSCS liabilities voluntarily as part of an ad-hoc data collection. The PRA would welcome feedback from third-country branches on the cost of providing this data on an ongoing basis.

6.7 In relation to proposals in Chapter 4, the PRA expects that firms would incur a one-off implementation cost to adapt systems and processes for XBRL reporting and to make associated changes to the MALIR and QRT templates. The PRA estimates that the total one-off implementation cost of these proposals would range between £0.5 million to £0.8 million across the 13 firms in scope of MALIR reporting. These cost estimates use the same methodology as set out in paragraphs 6.4-6.5. The PRA estimates that the technology costs associated with the transfer to XBRL would account for between £0.3 million to £0.6 million of the total one-off implementation costs and would welcome feedback from affected firms on their actual expected cost of implementation.

6.8 The PRA estimates that there would be an additional one-off implementation cost in the range of £0.03 million to £0.1 million across the 13 firms for changing the approach to reporting paired assets and derivatives. The PRA was able to obtain information from a sample of affected firms to help inform these cost estimates.

6.9 Overall, the PRA has estimated the one-off implementation aggregate costs for all firms to implement the proposals set out in this CP is in the range of £6.5 million to £12.2 million.^{footnote [7]} Due to the nature of the proposals, including limited changes to reporting requirements and minor amendments to templates, the PRA considers that the proposals would have a minimal impact on ongoing reporting costs.

7: Other Legal Requirements

‘Have regards’ analysis

7.1 In developing these proposals, the PRA has had regard to its framework of regulatory principles. The following factors, to which the PRA is required to have regard, were significant in the PRA’s analysis of the proposal:

1. The principle that a burden or restriction which is imposed on a person should be proportionate to the benefits which are expected to result from the imposition of that burden: The proposed package of reporting and disclosure amendments aims to improve the quality of data reported and data processing and would result in some additional data (particularly in relation to projected FSCS liabilities for branches), which would support supervision of firms and help to address risks to safety and soundness and policyholder protection. The PRA recognises that there is a cost to firms in making these changes but consider that this is proportionate to these expected benefits, considered in general terms. The PRA notes that the proposed package enhances the consistency and clarity of reporting requirements for firms and removes certain reporting requirements. The transition of MALIR templates from Excel to XBRL supports more efficient, automated processing. This also contributes to the proportionality of the proposed package.
   
2. The desirability of the PRA exercising its functions in a way that recognises differences in the nature of businesses carried on by different persons: Depending on the templates impacted by the proposals, some proposals only affect certain business model types eg solos, groups, or branches.
3. Transparent exercise of the PRA’s functions: A clear and consistent UK Solvency II reporting package would make it easier for firms to understand reporting requirements, thereby increasing the transparency of how the PRA exercises its functions.
4. The PRA requiring persons to publish information, as a means of contributing to the advancement of its objectives: The proposals cover rules, templates and instructions relating to reporting to the PRA and/or public disclosure.
5. The need to use the PRA’s resources in the most efficient and economical way: The proposals seek to make efficient and economic use of the PRA resources by making fixes and clarifications and addressing inconsistencies within the templates and instructions. Dealing with data quality issues and responding to firm queries have an ongoing resource impact on the PRA. The transfer of the MALIR templates from Excel to XBRL format would also allow for more efficient use of PRA resources as the data collection process would be more automated. The introduction of projected FSCS liabilities aims to reduce future potential burden on supervisory resource by facilitating monitoring and supporting the PRA’s approach to supervision.

7.2 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for these proposals, it is because the PRA considers that ‘have regard’ to not be a significant factor for these proposals.

Statutory Duty to Consult

7.3 The PRA has a statutory duty to consult when introducing new rules or changing rules (FSMA s138J), or new standards instruments (FSMA s138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so. 

7.4 None of the statutory panels were consulted about the proposals in this CP.

Impact on mutuals

7.5 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no different from the impact on other firms.

Equality and diversity

7.6 In developing its proposals, the PRA has had due regard to the equality objectives under s.149 of the Equality Act 2010. The PRA considers that the proposals do not give rise to equality and diversity implications.