In response to the PRA's publication of 'Solvency II: applying EIOPA's preparatory guidelines to PRA-authorised firms', Charles Garnsworthy, PwC's UK Solvency II Leader, commented:
"The PRA's Consultation Paper puts Solvency II firmly back on the agenda. This is perhaps the first time that there is a real expectation of Solvency II implementation within a finite and relatively short timespan. All insurers should therefore be reviewing their ability to meet the various requirements – that includes Pillar 1 calculations for firms using the standard formula as well as those planning to go the internal model route.
"With the Pillar 2 (governance and risk management) requirements relatively uncontroversial, and in many cases only a step change from current requirements, PRA has made it clear that they expect firms to be able to comply in full by day one. It is widely recognised that Pillar 3 (reporting) will mean a lot more work for many firms, as this is the area that is least well progressed to date.
"The main lesson learned from those firms who have already been developing ORSAs is that it takes longer than they originally expected – and it normally needs several iterations before the ORSA feels to be a natural part of the organisational calendar and management discipline. The role and involvement of the Board is stressed by PRA - and is entirely consistent with their expectations throughout ICAS+ and recent risk review activity."
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