PRA Consults on Financial Management and Planning by Insurers
PRA published the consultation paper CP23/17 on financial management and planning by insurers. PRA is seeking views on the draft supervisory statement—which has been included in the Appendix to CP23/17—on effective financial management and planning by insurance firms and groups. PRA invites feedback on the proposals set out in CP23/17 by February 09, 2018.
The draft supervisory statement sets out the PRA expectations covering the framework for development and maintenance of a risk appetite statement by an insurer, the application of this risk appetite to an insurer’s business and financial plans, and the assessment of the suitability and sustainability of capital distribution plans in the context of this risk appetite. These proposals aim to set out how the application of effective risk management and governance may be linked together with the need for insurers to maintain a sound financial condition going forward. PRA considers that effective financial management and planning is especially important for insurers with a high risk appetite and for insurers with capital levels that may fluctuate significantly.
The draft supervisory statement is intended to complement existing policy material, rather than to set any new expectations on governance or risk management for insurers. The supervisory statement is drafted in the context of the Conditions Governing Business and Investments Parts of the PRA Rulebook and Articles 258–267 of the Solvency II Regulation (Commission Delegated Regulation (EU) 2015/35). It would sit alongside "The PRA’s approach to insurance supervision"; SS41/15, titled "Solvency II: applying EIOPA Set 2, System of Governance and ORSA Guidelines"; SS5/16 titled "Corporate Governance: Board responsibilities"; SS19/16 titled "Solvency II: ORSA"; and SS5/17 titled "Dealing with a market turning event in the general insurance sector." CP23/17 is relevant to all UK insurance firms and groups, in scope of the Solvency II Directive, and to the Society of Lloyd’s and managing agents.
Related Link: CP23/17 (PDF)
Keywords: Europe, UK, Insurance, Financial Management and Planning, CP23/17, Solvency II, Consultation, PRA
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Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
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