PRA consults on calculation of technical provisions

The Prudential Regulation Authority (PRA) has published a consultation paper seeking views from general insurers on a draft supervisory statement which sets out the PRA’s expectations in relation to the calculation of technical provisions and the use of internal models under Solvency II. 

The PRA is publishing this statement to enable firms to consider its expectations as part of their planning and preparation for the new regime.  The statement expands on the PRA’s general approach (set out in its insurance approach document) and seeks to ensure that firms set an adequate level of technical provision and hold sufficient capital.  

The Solvency II Directive will not come into force until 1 January 2016.  The PRA expects to receive legal powers to receive, review and make determinations on applications at transposition on 31 March 2015.  The PRA acknowledges, however, that further directly applicable regulations or guidelines from the European Insurance and Occupational Pensions Authority may be issued in relation to the areas covered in this statement, and it draws firms’ attention to the fact that this statement may be subject to review, and may be withdrawn on or before 31 December 2015.  

Comments are requested by 14 April 2014.  

Related link:

http://www.bankofengland.co.uk/pra/Documents/publications/policy/2014/solvency2calctechcp714.pdf