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

    PRA Publishes Q&A on Property Valuation Requirements Under CRR

    PRA published a set of questions and answers (Q&A) covering common queries regarding residential and commercial property valuations, for the purpose of the Capital Requirements Regulation (CRR), during the period of disruption caused by COVID-19 pandemic.

    May 29, 2020 WebPage Regulatory News

    IOSCO Consults on Outsourcing Principles for Operational Resilience

    IOSCO proposed updates to its principles for regulated entities that outsource tasks to service providers.

    May 28, 2020 WebPage Regulatory News

    MAS Consortium to Develop AI Fairness Metrics for Credit Scoring

    MAS announced that the first phase of the Veritas initiative will commence with the development of fairness metrics in credit risk scoring and customer marketing.

    May 28, 2020 WebPage Regulatory News

    BoE Updates Definitions for BTL Data Collection

    BoE published the Statistical Notice 2020/4 to update the buy-to-let (BTL) Phase 2 and Phase 3 definitions for the Interest Rate Type data item.

    May 28, 2020 WebPage Regulatory News

    FSI Examines Financial Stability Implications of Payment Deferrals

    FSI published a brief note that examines challenges facing the banking sector as a result of the payment deferral programs put in place to support borrowers affected by the COVID-19 pandemic.

    May 28, 2020 WebPage Regulatory News

    PRA Finalizes Policy on Prudent Person Principle Under Solvency II

    PRA published the policy statement PS14/20, which contains the supervisory statement SS1/20 and the feedback to responses to the consultation paper CP22/19 on expectations for investment by firms in accordance with the Prudent Person Principle, or PPP, as set out in the Investments Part of the PRA Rulebook.

    May 27, 2020 WebPage Regulatory News

    EBA on Extending Large Exposure Limits for French Systemic Banks

    EBA published an opinion following the notification by the French macro-prudential authority, the Haut Conseil de Stabilité Financière (HCSF), of its intention to extend a measure introduced in 2018 on the use of Article 458(9) of the Capital Requirements Regulation (CRR).

    May 27, 2020 WebPage Regulatory News

    ECB Highlights NPL Resolution as Key Policy Issue in Post-COVID Europe

    As part of a Research Bulletin on the recent policy-relevant work, ECB published an article that examines the lessons learned from past crises for nonperforming loan resolution in the post COVID-19 period.

    May 27, 2020 WebPage Regulatory News

    RBNZ Publishes Financial Stability Report for May 2020

    RBNZ published the financial stability report for May 2020. This review of the financial system in the country highlights that the economic disruption associated with COVID-19 will present challenges to the financial system.

    May 27, 2020 WebPage Regulatory News

    ECB Updates Guidance on Reporting of Securities Holdings Statistics

    ECB updated the guidance notes for reporting related to the statistics on holdings of securities by reporting banking groups (SHSG).

    May 26, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5231