Scale-up Unit : Insurers

Introduction

Small insurers and mutuals can sometimes struggle with the complexity of regulations when launching new products, and there may be a strong desire to have greater clarity around the regulatory treatment and processes, especially where external support may not be feasible or practical or may add a level of expense to make new initiatives uneconomic.

The Scale-up Unit was created to address this by providing a dedicated point of contact to tackle these challenges.  On this page you can find information about new initiatives the Scale-up Unit is undertaking for insurers that are currently, or are looking to start, scaling up, as well as other relevant existing PRA and FCA initiatives.

What will the Scale-up Unit do for insurers?

The Scale-up Unit provides a dedicated point of contact to help insurers that are looking to scale up by providing support on topics including:

Regulatory processes: the Scale-up Unit can help firms to understand which regulatory processes would be relevant to their scaling-up plans and to co-ordinate regulator interactions ahead of, and during the process of, formal submission, for example on variation of permission (VoP) applications;

Product innovations: for firms looking to launch a new or innovative product or service, the Scale-up Unit can support an early-stage discussion on these plans and the corresponding regulatory treatment; and

The impact of new policy proposals on Scale-up firms: if there are aspects of new policy which are relevant to, or could impact scaling-up firms, the Unit provides a means to facilitate information-sharing for the purposes of the PRA and FCA’s policy-making processes. 

Sector engagement: The Scale-up Unit will support ongoing dialogue between regulators, firms and the wider scale-up eco-system.

We’re also interested in hearing industry’s views on where we could be doing more - details on how to engage with us are available below.

The Scale-up Unit has engaged with industry bodies and with interested parties on a bilateral basis, and we’re interested in hearing industry’s views on where we could be doing more - details on how to engage with us are available below. 

How is this different to engagement with a supervision team?

The core principles of the PRA and FCA’s supervisory approaches will remain the same (you can find out more from ‘Related Links’). The Scale-up Unit will work in tandem with existing supervision teams and regulatory processes where they touch on specific aspects of your plans to scale up. The Scale-up Unit will not provide general regulatory information or cover topics outside of this, and it is not intended to be a substitute for discussions you would typically have with existing supervision team contacts. The Unit will not lower regulatory standards, ensure fast-track applications or guarantee a successful decision, and engagement is not an endorsement of your products or services. 

Which insurers are eligible to access the Scale-up Unit?

The unit’s offering is specifically designed to support firms that are already, or are looking to start, scaling up within their chosen markets.

As such, insurers which meet the following criteria can access this Unit:

1. You are in scope of PRA/FCA dual regulation – this aspect of the Scale-up Unit is only for firms that are already authorised by both regulators;
2. You:

• are in, or about to enter, a period of sustained growth – where you have for several years and are continuing to, or are about to start to, grow at a rate which is demonstrably above the growth rate of your market for a sustained period of time; or
• are looking to scale up a specific product or service that is genuinely innovative – where it is significantly different or there are few or no comparable products already in the market;
• are ready to do so – You have made a good faith effort to research and understand how our rules apply to your business model and now have a specific issue you are seeking our help with; and
• have a genuine need for support from the regulators to scale – you are not of a size where accessing these resources via other channels would be feasible or practical, or doing so would place limits on your ability to scale.   

When considering requests for support, the Unit will be mindful of 
   (i) the size and complexity of a firm’s activities; and 
   (ii) the extent of its available financial and non-financial resources or its ability to access these from third parties. 

As such, we expect the Unit to be of particular interest to Category 3 and 4 firms under the PRA’s firm categorisation model.

As set out in the PRA and FCA’s Mutuals Landscape Report, the regulators’ ambition is to facilitate the long-term sustainable growth of the sector and ensure that mutuals have the same opportunities to compete as other firms. Consistent with this, we welcome engagement from mutuals that have credible ambitions to grow or innovate in a safe and sustainable manner and would benefit from early and structured engagement with the Scale-up Unit. 

Other existing initiatives to support insurers looking to scale up

Listed below are some of the steps we have already taken to advance the secondary competitiveness and growth objective (SCGO), which are relevant to financial services firms looking to scale their businesses in the UK. Together with the work of the Scale-up Unit, we believe that these, and future initiatives, will deliver significant simplifications and efficiencies for insurers operating in the UK, while maintaining resilience – a necessary foundation for sustainable economic growth. 

You can find out more about these initiatives by following the links below:

Authorisations timelines: the PRA and FCA have announced that we will be reducing timelines and streamlining processes for authorisations in a number of areas including new, non-statutory targets that go beyond the Government’s proposed new deadlines in legislation where possible and we are already publicly reporting against these. These changes will promote substantially quicker determinations of applications for firms in the UK. For a sub-set of London market wholesale applicants, we provide an accelerated route to authorisation through the wholesale insurance accelerated authorisation pathway.  Additionally, we have created a new accelerated pathway for ISPVs meeting the criteria set out in PS9/25 – Changes to the UK ISPV regulatory framework. 

Senior Managers and Certification Regime (SMCR): the PRA and FCA announced the first phase of reforms to the regime to streamline processes and increase their efficacy. This complements recent improvements to the PRA’s internal processes for determining the fitness and propriety of Senior Managers.

UK Solvency II Reforms: the PRA’s UK Solvency II reforms included a number of initiatives which reduce regulatory burden and could be particularly beneficial for firms scaling up. These include streamlining the Internal Model and Matching Adjustment permission processes, changes to the Risk Margin, Reporting Requirements, UK Solvency II thresholds and the introduction of the Mobilisation regime for insurers.

Matching Adjustments Permissions approach: We have set up a new Matching Adjustment (‘MA’) permissions team which is allowing us to assess MA applications more quickly and facilitating the wider range of investment opportunities now available within the MA portfolio. 

This is not an exhaustive list of the work we are doing which will support firms looking to scale up.   You can out more about the work of the PRA and FCA including our open consultations and discussion papers in ‘Related Links.’

Contact us

If you are an existing regulated insurer and fit these criteria and would like to find out more, or if you are interested in engaging with us to discuss ideas for how we can support growing firms, please contact us at the following: InsurerScaleUpUnit@bankofengland.co.uk