Speaking at the annual conference of the Association of British Insurers (ABI), Sam Woods, Deputy Governor for Prudential Regulation and Prudential Regulation Authority (PRA) Chief Executive Officer (CEO) said consultations are now underway for an extensive package of reforms that aim to improve re/insurers’ implementation of Solvency II.
Woods said that the PRA authorities are considering the effects of the regulation on policyholders; “we have seen the significant human cost that can be associated with insurance failures Equitable Life being a prominent example and Parliament has given the PRA a particular duty to represent the interests of the policyholder.
“Delivering the PRA’s responsibility means maintaining high standards of safety and soundness for UK insurers.”
As the Treasury Select Committee (TSC) examines the regulatory framework, Woods said that although the implementation of Solvency II has so far not hindered the industry’s profitability and growth or driven up pricing, “it is clear that we can make our implementation of the directive work better.
The TSC has highlighted aspects of Solvency II which are not working well and the PRA has made a series of proposals to give firms greater confidence in using the Matching Adjustment (MA).
Proposed reforms would reduce “unnecessary costs and complications” in modelling and reporting requirements where they have “no prudential benefit”, said Woods.
The PRA said it would respond to the proposals put forward by the TSC in due course and is working on the risk margin to tackle any problems facing the industry.
The UK Bank of England’s Prudential Regulatory Authority (PRA) arm has previously announced having opened a new consultation process which could result in changes to ease some of the regulatory reporting burden re/insurers have faced under Solvency II.
The proposals, contained in a consultation paper titled “Changes in insurance reporting requirements“, are the result of work to the UK’s insurance prudential framework in light of the implementation of Solvency II.
These potential updates to the re/insurance regulatory framework come at a time when the re/insurance industry has been calling for reform and a modernisation of the UK market’s operating environment in order to keep up with the demands of innovation and remain competitive as new re/insurance hubs show signs of emerging globally.











