PRA launched a consultation paper (CP27/17) that proposes updated expectations of firms in respect of the model change process set out in the Supervisory Statement SS12/16 titled “Solvency II: Changes to internal models used by UK insurance firms” and internal model change policies set out in SS17/16 titled “Solvency II: internal models – assessment, model change and the role of non-executive directors.” CP27/17 also proposes a process for quarterly model change reporting. The consultation closes on March 20, 2018. PRA also published a statement setting out its review of the time taken to assess model change applications approved since the implementation of Solvency II on January 01, 2016; how firms had completed the Common Application Package (CAP) when making model change applications; and how firms have defined model changes in model change policies.
PRA has developed the proposals in CP27/17 as part of its work on adjustments to the insurance prudential framework, in the light of experience following the introduction of Solvency II in the United Kingdom. This includes a series of improvements that support PRA’s commitment to the Treasury Select Committee. The proposals aim to reduce the burden on firms and to make better use of supervisory resources in pursuit of PRA objectives. CP27/17 is relevant to all UK Solvency II firms, the Society of Lloyd’s, and its managing agents. It is most relevant to firms that have an internal model approval. It may also be of interest to UK Solvency II firms seeking approval to use an internal model and to UK Solvency II firms that are part of the European Economic Area (EEA) or non-EEA groups with a group internal model.
PRA proposes that the updated guidance on the model change process and model change policies would be implemented in the second quarter of 2018. PRA considers that the proposed change to the model change process would result in the need for firms to modify their model change policies. Changes to the model change policy are subject to supervisory approval, following the procedure set out in paragraph 2.14 of SS12/16. PRA proposes that the changes in relation to minor model change reporting would take effect from June 2018.
Comment Due Date: March 20, 2018
Keywords: Europe, UK, Insurance, Solvency II, Internal Models, CP27/17, PRA
Previous ArticleIMF Reports on the 2017 Article IV Consultation with Brazil
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.