Pensions - Articles - PwC response to PRA's general insurance consultation paper

 "The PRA's supervisory statement reflects the continuing pressure on rates and the challenging underwriting environment in the industry, alongside the wider economic environment."

 "There has been a lot of conversation in the industry that the market is waiting for a 'market changing event' to relieve pressure on rates and change the cycle. The reality is that to have a real impact and harden the market such an event would need to consist of multiple events, which could be an unfortunate combination of man-made, such as terrorism and cyber, as well natural catastrophes in countries with high insurance coverage. The most severe market changing events would impact both the asset and liability side of the balance sheets."

 "Firms are varied in their preparedness for such an event and today's statement will be a useful stimulus to make more formal plans to maximise future opportunities and also practice a dry run to deal with such an event when it comes."

 Marta Abramska, catastrophe risk specialist at PwC, added "In the Supervisory Statement the PRA focuses on the methods and systems companies will use to generate loss estimates from large events. PRA are interested in the accuracy and uncertainty of the estimates. Past catastrophes have shown that the models, and data feeding them, have struggled to provide timely estimates, even in developed insurance markets."

 "Firms will come under greater scrutiny from the regulator on how well they are prepared for a large market-turning loss."