General Insurance Article - ABI welcomes PRA proposed improvements to Solvency II

The Association of British Insurers (ABI) has welcomed the Prudential Regulation Authority’s (PRA) proposal to make improvements to the Solvency II regime, less than two years after its implementation.

 The PRA has begun by consulting on the Matching Adjustment (MA), which helps insurers invest in long-term assets as a natural match to their long-term liabilities. This is one of a number of areas where the ABI has been calling for the regulator to make targeted improvements as the new regime beds in, and could lead to changes in the new year.

 The PRA has also committed to making further improvements to other areas the ABI has highlighted, including on internal model change, and on the burden of Solvency II reporting.

 ABI Head of Prudential Regulation, Steven Findlay, says: “Solvency II has been in force for almost two years – and it is sensible for the PRA to now review and improve it.

 “The industry has consistently and unanimously highlighted concerns about the rigid nature of the matching adjustment, the burden firms face when trying to keep their internal model up-to-date and the excessive cost of regulatory reporting.

 “The ABI has worked closely with the PRA over the summer on each of these areas. These proposals, which address a number of our recommendations, are an important step forward.

 “We look forward to further proposals from the PRA to address other areas of concern” 

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