|
|
1.1 In June 2023, the Prudential Regulation Authority (PRA) published the consultation paper (CP)12/23 – Review of Solvency II: Adapting to the UK insurance market Opens in a new window. This marked an important milestone towards adapting the Solvency II framework to the UK market. The CP set out the PRA’s proposals to deliver significant reforms for Solvency II, designed to support a more competitive and dynamic sector in the UK, while maintaining high standards of policyholder protection.
1.2 This PRA policy statement (PS) provides the PRA’s feedback to responses received to the following chapters of CP12/23:
1.3 This PS also contains the PRA’s final policy in the form of near-final rules and updated near-final policy materials, including supervisory statements (SSs) and statements of policy (SoPs).footnote [1] Please see Appendix 1 for a full list of the materials that have been amended, introduced, or deleted as part of the final policy in this PS.
1.4 While this PS contains the PRA’s final policy in relation to the proposed reforms in CP12/23, the related rules and policy materials are considered near-final due to the potential for further changes resulting from the PRA’s phased plan for consulting on Solvency II reforms and the transfer of the remaining firm-facing Solvency II requirements from assimilated law (previously known as retained EU law)footnote [2] into the PRA Rulebook and other policy materials (the PRA policy framework). The PRA expects such changes are likely to be limited to minor amendments only, to ensure that all the PRA rules and policy across the relevant CPs for the review of Solvency II are aligned and operate coherently with each other, and relevant legislation, as explained in paragraph 1.35 to 1.40 below. The near-final rules and policy materials in this PS will be finalised as part of the transfer of the remaining firm-facing Solvency II requirements into the PRA policy framework later this year. However, this transfer process will make no further policy changes in relation to the reforms set out in this PS.
1.5 The PRA’s feedback to responses received to Chapter 7 (Reporting and disclosure) of CP12/23 is not included in this PS. To provide a holistic view of the remaining reforms to Solvency II reporting and disclosure requirements,footnote [3] the PRA’s feedback to responses received to both Chapter 7 of CP12/23 and CP14/22 – Review of Solvency II: Reporting phase 2 will be set out together, in a separate PS.footnote [4]
1.6 The PRA’s feedback to responses received to Chapter 11 (Administrative amendments to PRA rules) of CP12/23 has been set out separately in PS19/23 – Responses to proposed minor amendments in CP8/23, Chapter 11 of CP12/23 and CP22/23, which was published in December 2023. These proposed minor amendments were consequential to HM Treasury’s (HMT) reforms Opens in a new window to the Solvency II risk margin, which are now in force.footnote [5]
1.7 This PS is relevant to UK Solvency II firms, the Society of Lloyd’s and its members and managing agents, insurance and reinsurance undertakings that have a UK branch (third-country branch undertakings), and UK holding companies. This PS will refer to these collectively as ‘insurers’ or ‘firms’ unless otherwise specified.
1.8 The PS will also be of interest to non-Directive firms and anyone intending to provide insurance services operating in, or providing services into, the UK, in so far as the proposals relate to the thresholds for Solvency II to apply and a new mobilisation regime for prospective insurers intending to enter the UK insurance sector.