Featured Product

    PRA Extends Policyholder Protection for Building Guarantee Policies

    October 09, 2020

    PRA published the policy statement PS21/20 that contains a rule change to increase protection for eligible policyholders of building guarantee policies or BGPs. As part of this amendment, protection will be extended to 100% for protected policyholders of building guarantee policies. PS21/20 amends the Policyholder Protection Part of the PRA Rulebook (Appendix). According to PRA, this instrument may be cited as "PRA Rulebook: Solvency II Firms: Non Solvency II Firms: Non Authorised Persons: FSCS Limit for Building Guarantee Insurance Instrument 2020." The rule change came into effect on October 08, 2020.

    PRA is responsible for making rules that govern the operation of the Financial Services Compensation Scheme in relation to deposit-takers and insurers. Rules in relation to insurers are contained in the Policyholder Protection Part of the PRA Rulebook. In certain cases mentioned in the Policyholder Protection 17.2(1)(a), protected policyholders are covered for 100% of any benefit under their contract of general insurance. In all other cases, protected policyholders should receive at least 90% of any benefit under their contract of general insurance. PRA considers that 90% coverage for protected policyholders of a building guarantee policy no longer amounts to an appropriate degree of protection.

    PRA defines building guarantee policy as a contract of general insurance providing building guarantee, construction warranty, and/or structural defects cover in relation to newly built, converted, or renovated residential property including, but not limited to, the risk of physical damage and/or defect arising from non-compliance with relevant building or fire regulations or standards. PRA also notes that the ultimate beneficiaries of building guarantee policies have little choice in the selection of their insurer, as the policy is usually provided to property owners by the builder and the policy is transferred to policyholders in onward sales. Under rule changes set out in PS21/20, protection will be extended to 100% for protected policyholders of building guarantee policies.

    The policy set out in PS21/20 has been designed in the context of withdrawal of UK from EU and entry into the transition period, during which time 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 those 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.

     

    Related Links

    Effective Date: October 08, 2020

    Keywords: Europe, UK, Insurance, Solvency II, PRA Rulebook, Policyholder Protection, Building Guarantee Policy, PRA

    Featured Experts
    Related Articles
    News

    ESAs Publish Reporting Templates for Financial Conglomerates

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.

    January 18, 2021 WebPage Regulatory News
    News

    EBA Publishes Report on Asset Encumbrance of Banks in EU

    EBA published the annual report on asset encumbrance of banks in EU.

    January 18, 2021 WebPage Regulatory News
    News

    US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C

    FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.

    January 15, 2021 WebPage Regulatory News
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    ECB Letter Sets Out Strategies to Address Issue of Nonperforming Loans

    ECB published a letter from Andrea Enria, the Chair of the Supervisory Board of ECB, answering questions raised by the President of the Bundestag (the German federal parliament) on how ECB assesses the financial stability of the euro area in the context of the significant level of nonperforming loans.

    January 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6450