Bharat Raj, Head of London Markets, said: “The PRA’s Policy Statement is a positive step for the UK insurance market and will deliver practical improvements to the way internal models are managed and regulated.
“The Policy Statement also makes a number of positive improvements to the draft framework set out in PRA’s consultation paper in June last year. We are pleased to see greater practicality in the calculation Capital Add-Ons and the improved clarity on timeframes for reviewing internal model applications.
We also welcome the additional clarity on timeframes for insurers that need to combine their internal models, for example, following a merger or acquisition. We believe that the timeframe set out in the Policy Statement is reasonable and realistic.”
Kathryn Moore, Head of Personal Lines, said: “The PRA’s Policy Statement on adapting Solvency II for the UK provides further clarity and further detail for insurers and other industry stakeholders.”
“We are particularly pleased to see a further increase in the gross written premium threshold above which insurers are regulated under the Solvency II rules. This increase from the originally proposed £15 million to £25 million means that more smaller insurers will fall out of the scope of Solvency II.
“Boards of affected firms should take this opportunity to assess how these proposals will impact their solvency position going forward. Those firms who do not exceed the threshold can continue to operate under Solvency II regime by applying for a voluntary requirement (VREQ).
“With the amended regime coming into force at the end of this year, time is of the essence for insurers to prepare and firms are encouraged to notify any changes in status with their supervisor at the PRA.”
PRA PS2/24 – Review of Solvency II: Adapting to the UK insurance market
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