PRA published final policy (in PS13/20) setting out the approach and expectations for authorization and supervision of insurance special purpose vehicles (ISPVs or insurance SPVs). PS13/20 presents amendments to the Insurance Special Purpose Vehicle Part of the PRA Rulebook, contains an updated supervisory statement SS8/17 on authorization and supervision of ISPVs, and sets out the New Risk Assumption Notification Form for multi-arrangement ISPVs or MISPVs. PS13/20 also presents feedback to responses to the consultation paper CP19/19 on updates to the authorization and supervision of ISPVs.
PS13/20 is relevant to parties that wish to apply for, or that have obtained authorization, as an ISPV. It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II. Post consultation, PRA has amended the wording of paragraph 3.4 in SS8/17 to improve readability, in addition to correcting certain references in paragraph 3.30. As per PRA, these changes do not alter the policy intent and have a significant impact on firms, or a differential impact on mutuals. Therefore, PRA has not updated the cost-benefit analysis that accompanied the CP19/19.
The policy in SS8/17 took effect on the publication of PS13/20—that is, on May 22, 2020. The amendments to the Insurance Special Purpose Vehicle Part of the PRA Rulebook and the New Risk Assumption Notification Form for MISPV will be effective from May 26, 2020. The policy set out in PS13/20 has been designed in the context of the withdrawal of UK from EU and entry into the transition period, during which time the UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including the changes arising once any new arrangements with EU take effect. PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018.
Effective Date: May 22, 2020/May 26, 2020
Keywords: Europe, UK, Insurance, Reinsurance, Solvency II, ISPV, PRA Rulebook, PS13/20, SS8/17, Special Purpose Vehicle, PRA
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