Featured Product

    PRA on Dealing with Market Turning Event in General Insurance Sector

    July 05, 2017

    The PRA published policy statement PS16/17 and supervisory statement SS5/17 on dealing with a market turning event in the general insurance sector. PS16/17 provides feedback to responses for consultation paper CP32/16 titled “Dealing with a market turning event in the general insurance sector.” SS5/17 sets out PRA’s expectations of how firms might prepare for, and respond to, a major general insurance loss event, which might affect their solvency and future business plans, and explains how the PRA expects firms to interact with it on these issues.

    The statements are relevant to all PRA-regulated general insurance firms in scope of the Solvency II Directive and to the Society of Lloyd’s and managing agents (Solvency II firms). SS5/17 is aimed at the firms operating in the global specialty insurance and reinsurance market, known as the London Market, whose business models are exposed to low-probability, high-severity catastrophe risks. The SS5/17 should be read in conjunction with PRA rules in the Solvency II sector of the PRA Rulebook and the PRA insurance approach document. The PRA had received seven responses to CP32/16 and amended the draft supervisory statement based on further analyses and the responses received. The changes and feedback to responses are set out in Chapter 2 of PS16/17. PS16/17 also provides responses, in the context of the proposals and policy on a market turning event, to recommendations made to the PRA, as set out in an industry whitepaper that was published in January 2017. This follows an industry-sponsored dry run exercise simulating a USD 200 billion catastrophic loss event that took place in November 2016. No changes have been made to the SS5/17 regarding a breach of minimum capital requirement (MCR) or solvency capital requirement (SCR) and the changes include:

    Further consideration of the characteristics of a market turning event and its impact on firms’ model change policies

    Addressing concerns over the speed of a regulatory response following a market turning event (including the PRA’s interaction with Lloyd’s and other regulators)

    Amendments made to the example loss return template

    Clarification of the application of proportionality and firms’ use of existing documentation such as Own Risk & Solvency Assessments (ORSAs)

    Amendments to more explicitly draw out the importance of liquidity management following a market turning event

     

    Related Links

    PS16/17 (PDF)

    SS5/17 (PDF)

    CP32/16 (PDF)

    Keywords: Europe, United Kingdom, PRA, Insurance, Solvency II, Market Turning Event

    Featured Experts
    Related Articles
    News

    BCBS Consults on Revised Disclosures for Market Risk Framework

    BCBS launched a consultation on the revised disclosure requirements for the market risk framework for banks.

    November 14, 2019 WebPage Regulatory News
    News

    FSB Examines Implementation of Resolution Regimes in Financial Sector

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Final Policy on Maintenance of TMTP Under Solvency II

    PRA published the policy statement (PS25/19) that contains the final supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTPs) under Solvency II.

    November 14, 2019 WebPage Regulatory News
    News

    BCBS Consults on Disclosure Templates of Sovereign Exposures of Banks

    BCBS published a consultation on the voluntary disclosure templates related to sovereign exposures of banks.

    November 14, 2019 WebPage Regulatory News
    News

    IAIS Adopts ComFrame, ICS, and Holistic Framework for Systemic Risk

    IAIS adopted a comprehensive set of reforms—Common Framework (ComFrame), Insurance Capital Standard (ICS) Version 2.0, and Holistic Framework for Systemic Risk—that will enable effective cross-border supervision of insurance groups and contribute to global financial stability.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Templates for Statistical Disclosures Under Solvency II

    PRA published templates for statistical disclosures, as required under Article 31(2) of the Solvency II Directive.

    November 14, 2019 WebPage Regulatory News
    News

    FASB Proposes Improvements to Derivatives and Hedging Standard

    FASB proposed an Accounting Standards Update, on codification improvements to hedge accounting under Topic 815, to clarify certain sections of the 2017 hedge accounting standard (Update 2017-12).

    November 13, 2019 WebPage Regulatory News
    News

    FASB Approves Guidance to Assist in Transition to New Reference Rates

    FASB approved an Accounting Standards Update (Topic 848) to provide temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the reference rate reform on financial reporting.

    November 13, 2019 WebPage Regulatory News
    News

    BIS and MAS Launch Innovation Hub in Singapore

    BIS and MAS launched the BIS Innovation Hub Center in Singapore.

    November 13, 2019 WebPage Regulatory News
    News

    MAS and Industry to Create Framework for Adoption of Responsible AIDA

    MAS announced that it is working with financial industry partners to create a framework for financial institutions to promote the responsible adoption of Artificial Intelligence and Data Analytics (AIDA).

    November 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4142