This supervisory statement sets out the PRA’s expectations of how non-life firms should identify and manage all risks to which their business could be exposed over the long and short term.
This enables firms to assess their ability to meet obligations to policyholders in the event that the firm decides to cease writing business beyond that which it plans to write over the next twelve months, and to meet those obligations in stressed conditions.
This supervisory statement is of interest to UK solo insurance firms within the scope of Solvency II that carry out non-life business, and to the Society of Lloyd’s in respect of each of their Syndicates and in respect of outputs of the Lloyd’s internal model.
This statement is consistent with SS4/13 on capturing all known risks in a firm’s forward-looking assessment, or ORSA, and sets out an option that enables firms to demnstrate the consideration of the ultimate time horizont.
The PRA expects firms to consider, and to be able to demonstrate to the PRA that they have considered:
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The total uncertainty and risk over the time horizont of the run-off of a firm’s obligations to its policyholders, including obligations relating to business planned to be written in the twelve months following the relevant reference date ("the ultimate horizon“);and
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risks over the ultimate time horizon in order to adequately capture all known risks as part of their ORSA.
Supervisory statement
© Bank of England
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