Insurance Regulatory eBulletin - Prudential regulation

Solvency II Group Supervision rules 20.1 and 20.2 – modification by consent

On 26 July, the PRA issued a press release relating to the Covered Agreement signed by the EU and US on 22 September 2017, whose "group supervision" provisions came into effect on 8 April 2018.

The Solvency II Regulations 2015 are modified to align the Solvency II framework with the provisions of the Covered Agreement. The application process is standardised and it should improve the administrative efficiency for US-headed insurance groups in meeting UK regulatory requirements. The PRA is inviting firms with US-parented groups to apply a rule modification to reflect the Covered Agreement.

Implementing the extension of the SMCR to insurers – CP18/18

On 31 July, the PRA published a Consultation Paper (CP18/18) concerning the extension of the Senior Managers and Certification Regime (SMCR), outlining a technical correction to Rule 2.2 in the Solvency II firms: Insurance General Application Part of the PRA Rulebook, along with some consequential changes and minor administrative amendments related to the extension of the SMCR to insurers covering:

• application of an ‘overlap’ rule for individuals with ‘FCA responsibilities’ (as defined in the FCA Handbook);
• updates to the cross-references in the PRA Rulebook to the FCA’s Handbook;
• transitional arrangements for the widening of scope of the application of regulatory reference requirements;
• deletion of some previous transitional rules that are now obsolete; and
• other minor consequential amendments.

Comments on the proposals should be submitted on or before 1 October 2018.

PRA approach to enforcement: statutory statements of policy and procedure

On 3 August, the PRA published an updated Statement of Policy regarding its statutory statements of policy and procedure. The Statement of Policy relates to:

• statutory notices and decision making;
• financial penalties;
• suspensions and restrictions;
• settlement;
• publicity of regulatory action; and
• conduct of interviews pursuant to section 169(7) of the Financial Services and Markets Act 2000.

The revised Statement of Policy has been updated to reflect the policy changes set out in the Bank of England’s PS/EDMC2018 which establishes the Enforcement Decision Making Committee and sets out its related policy and procedures.

PRA supervisory disclosures relating to Solvency II

On 21 August, the PRA released its public supervisory disclosures in line with its obligations under Article 31(2) of the Solvency II Directive. The disclosures include:

• 2017 aggregate statistical data on key aspects of the application of the prudential framework;
• a table covering the manner of exercise of the options provided for in the Solvency II Directive;
• links to the texts of insurance regulations applicable in the United Kingdom; and
• links to the PRA’s supervisory approach.