The supervisory statement is aimed at firms and groups (‘firms’) carrying on general insurance business within the scope of the Solvency II (SII) Directive.
While the SII Directive will not come into force until 1 January 2016, the PRA is publishing this statement now to enable firms to consider the PRA’s expectations as part of their planning and preparation for the new regime. The PRA expects to receive legal powers to receive, review and make determinations on applications at transposition on 31 March, 2015. The PRA acknowledges that further directly applicable regulations or guidelines from the European Insurance and Occupational Pensions Authority may, in due course, be issued in relation to the areas covered in this statement, and draws firms’ attention to the fact that this statement may be subject to review, and may be withdrawn on or before 31 December, 2015.
The statement expands on the PRA's general approach as set out in its insurance approach document. As part of the PRA’s preparations for the SII regime, this statement seeks to ensure that firms set an adequate level of technical provisions and hold sufficient capital. By clearly and consistently explaining its expectations of firms in relation to the particular areas addressed, the PRA seeks to advance its statutory objectives of ensuring the safety and soundness of the firms it regulates, and contributing to securing an appropriate degree of protection for policyholders. The PRA has considered matters to which it is required to have regard, and it considers that this statement is compatible with the Regulatory Principles.
In light of the introduction of a statutory secondary competition objective for the PRA it has also considered whether the content of this consultation facilitates effective competition in markets for services provided by PRA-authorised persons in carrying on regulated activities. This statement is designed to assist firms to prepare for the implementation of harmonised prudential capital standards under the SII. The PRA therefore considers the content of this consultation to be compatible with the facilitation of competition.
This statement is intended to apply to all general insurance firms within the scope of SII. This includes mutuals which, the PRA considers, are unlikely to be affected any differently from other firms.
The PRA has considered equality and diversity issues but has not identified any impacts arising from these proposals.
The consultation closes on Monday 14 April, 2014.
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