HM Treasury Updated Risk Transformation Regulations 2017 for ILS in UK
HM Treasury published a response following its consultation in November 2016 on a new regulatory and tax framework for insurance-linked securities (ILS) in the UK. HM Treasury also published an updated version of the Risk Transformation Regulations 2017, which implement a new regulatory and tax framework for ILS. The HM Treasury response and the updated regulations reflect a change to the proposed UK regulatory regime for ISPVs since the publication of CP42/16.
In November 2016, the PRA and Financial Conduct Authority (FCA) also published an associated joint consultation paper (CP42/16) on the authorization and supervision of insurance special purpose vehicles (ISPVs). Later this year, the PRA and FCA intend to publish their approach to the authorization and supervision of ISPVs, which will also include details of the feedback received in response to CP42/16. CP42/16 included a proposal to require pre-transaction notification to the PRA where a multi-arrangement insurance special purpose vehicle (MISPV) intended to create additional cells. Respondents to the consultations identified some potential difficulties with the pre-transaction notification proposal. Since the November consultation, further work has been undertaken by HM Treasury and the PRA to explore alternatives to the proposed approach, while ensuring that Solvency II requirements continue to be met.
Under the new approach set out by HM Treasury in the response and updated regulations, the PRA would authorize the MISPV’s scope of activities, including the parameters within which future cells may be established, and the scope of the firm’s permission will be limited on this basis. Provided that a new proposed cell is in line with those activities agreed with the PRA, a post-transaction notification process will be adopted, whereby the PRA is notified within five working days of the vehicle assuming a new risk. Further details will be communicated in the PRA’s response to CP42/16.
Related Links
The Risk Transformation Regulations, 2017
Keywords: Europe, United Kingdom, Insurance, Solvency II, ILS, ISPV, PRA, FCA, HM Treasury
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
JFSA Consults on Its Draft Report on Supervisory ApproachesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.