On 12 May, the PRA issued policy on the accountability regimes. Policy Statement PS12/17 Strengthening individual accountability in banking and insurance: amendments and optimisations provides feedback to responses to CP 34/16 (see UK Insurance: PRA (3 October 2016)) and also provides:
- final rules amending the Senior Managers and Certification Regime (SM&CR) and Senior Insurance Managers Regime (SIMR); and
- updates to SS35/15 ‘Strengthening individual accountability in insurance’.
The application of the Conduct Rules to Notified NEDs will become effective on 3 July 2017 and will apply to breaches identified on or after that date. The optimisations to the SIMR (including the application of rules on insurers that outsource their internal audit function) will become effective on 12 September 2017. The PRA will shortly be publishing a consultation paper which will consult on a new Head of Key Business Area SIMF for insurers (SIMF6), Chief Operations SIMF, and a corresponding new Prescribed Responsibility (PR) in relation to outsourced operational functions and activities. The policy development of the Strengthening accountability project can be found on Strengthening accountability - Policy development.
On 11 April, the PRA wrote a letter asking the largest regulated general insurers to provide information about the impact of a range of stress tests on their projected Own Funds, as well as providing additional information on their sectoral exposures to the UK economy.
On 7 April, Sam Woods, Deputy Governor, Prudential Regulation, wrote a letter to banks, insurers and designated investment firms undertaking cross-border activities between the UK and the rest of the European Union (EU) regarding contingency planning for the UK’s withdrawal from the European Union.
On 20 March, Sam Woods spoke on "Insurance supervision at the PRA" and commented on aspects of Solvency II (see European Insurance: Solvency II (5 June 2017)). He also remarked on the "Evaluation of the Prudential Regulation Authority’s approach to its Insurance Objective" by the Bank's Independent Evaluation Office (IEO) which contains a number of recommendations. The report states that "Neither the Approach document nor internal supervisory guidance makes clear that the FCA has by far the greater role in the policyholder, and broader consumer, sphere." They also recommended that "The Prudential Regulation Committee (PRC) to consider the extent to which it prioritises protection for some policyholders via the firm categorisation framework". "The PRA’s response to the Independent Evaluation Office’s evaluation of the PRA’s approach to its insurance objective" states that [the PRA] will take forward a set of actions in response. These actions include a paper to the PRC by September 2017 on the approach to the Insurance objective and, by December 2018, reflecting other priorities, another paper to the PRC on the appropriate levels of protection between different types of policyholders and the approach to firm categorisation.
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