Insurance Regulatory update - Prudential regulation

Financial management and planning by insurers – PS10/18 and SS4/18
On 17 May, PRA published a Policy Statement (PS10/18) and a Supervisory Statement (SS4/18) on financial management and planning by insurers which is for the attention of all UK firms and groups who are within the scope of the Solvency II Directive and the Society of Lloyd's and its managing agents.

The PS discusses the responses to the consultation (CP23/17) and notes the importance of a robust risk appetite framework in the management and monitoring of key business activities, and that many of the proposals set out in the proposed SS were in line with the current financial planning and management of firms, and would reinforce current good practice.

The SS sets out the PRA's expectations regarding insurers' development and maintenance of:

  • a risk appetite statement;
  • insurers' application of risk appetite when developing and monitoring their medium-term business and financial plans;
  • the assessment of the sustainability and suitability of capital distribution plans in the context of this risk appetite. 
The PRA has advised that SS4/18 should be read in conjunction with a number of other Supervisory Statements (SS41/15, SS5/16, SS19/16, SS4/17 and SS5/17), Articles 258-267 of Regulation (EU) 2015/35, the Conditions Governing Business and Investments Parts of the PRA Rulebook, and the PRA's approach to supervision. 

SS4/18 took effect on 17 May 2018

PRA Chief Actuary Forum for general insurers
The PRA is holding a Chief Actuary Forum for general insurers on Monday, 2 July targeted at holders of Senior Insurance Management Function 20 Chief Actuary.  The purpose of the forum is to provide an opportunity to discuss issues and share ideas relating to the actuarial function.  The PRA propose to cover the following topics at this inaugural event:

  • views on the PRA Dear Chief Actuary letter dated 5 February 2018;
  • engagement between the actuarial function and the board;
  • role of the actuarial function.

Registration is required by Friday 15 June.